Rapid Rescore And Improving Your Credit Score

March 22nd, 2023

credit score

Mortgage lenders have the potential to improve a mortgage borrower’s credit score. A rapid rescore can improve your credit score. Having an improved credit score can possibly lower your interest rate and/or your Private Mortgage Insurance (PMI) if your loan has PMI. However, improving a credit score is no guarantee of getting lower mortgage terms. Also, improving your credit score may not even be needed. Why? Read on.

Tools to improve credit score

There is a tool that most credit bureaus offer mortgage lenders called “Wayfinder”. Wayfinder shows the lender a computer-generated plan to show what the path might be to improve your credit score. The suggestions will usually consist of paying off credit cards, paying down credit cards, paying off an installment loan, or paying down an installment loan.

There is also a “What If” Credit Simulator that is a manual process as opposed to the computer generated Wayfinder process. When using the “What If” process a mortgage loan officer can manually select a credit card or multiple credit cards or installment loans to be paid down or paid off. The credit simulator will show if there would be any improvement in the credit score.

And the interesting thing is that the Fair Credit Reporting Act prohibits mortgage lenders from charging clients to correct or dispute credit report information. So, using Wayfinder or the What If Credit Simulator are costs absorbed by the mortgage lender!

Cost

You should thank your mortgage lender if you need this process and if they do it. Running these processes can be around $7 for each person to find out if there is a path forward to improve your score. And then the much larger fees come when they start to exercise the plan. Each piece of credit that needs to be corrected can cost $40-$50 each. That means if there are 4 pieces of individual credit to fix, that could cost the lender anywhere from $167-$207! If there are two people on the credit report then the price to the lender doubles!

After the individual pieces of credit are updated then the credit report is rescored.

Your Credit Score May Not Be As High As You Think It Is

Credit Score ranges

Credit scores may or may not be able to be pushed higher to a point of getting your mortgage terms improved. For example, assume your current credit score is 702 and your mortgage loan officer says that it appears that your credit score can be improved by 10 points. Taking your credit score to 712 may do nothing to improve your interest-rate or PMI. Pricing for interest-rates and mortgage insurance is usually done in 20 point blocks. Credit scores are typically measured in the following blocks:

620-639

640-659

660-679

680-699

700-719

720-739

740-759

760-779

780-799

800-829

820+

If your current credit score is 702 and can be improved to 712, the new credit score is still in the same block. Hence, it may not improve your mortgage terms at all.

However, assume your current credit score is 702 and your mortgage loan officer says that it appears that your credit score can be improved by 30 points. Taking your credit score to 732 may then improve your interest-rate or PMI.

Some lenders don’t allow a rescore to be used. And that makes things more confusing. They don’t want mortgage borrowers “gaming the system” to improve their score. They want to use the score that is more representative of their historical credit usage. You’ll have to ask your lender if and when a credit rescore might be usable.

Rapid rescoring is not credit repair

Rapid Rescoring does not repair your credit. It won’t delete late payments, missed payments, charge-offs, collections, or bankruptcies. You cannot wipe accurate credit that is negative off your credit report.

You cannot do a rapid rescore on your own. A lender must be this.

To contact me to discuss your credit, mortgage rates, or other mortgage questions, click here to schedule a call. Or you can email me directly.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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