We found that without question many consumers seeking bad credit home loan and bad credit mortgage refinance benefit from credit re-scoring, also known as rapid re-score. Although mortgage brokers and lenders using rapid re-score services were difficult for us to find, in most cases for a consumer with bad credit seeking a home loan or mortgage refinance the advantages were significant, and well worth the extra effort.
Rapid re-score involves electronically interfacing with all three credit bureaus (Experian, Equifax and Transunion) and processing disputes of erroneous, obsolete or unverified derogatory credit reporting during the home loan or mortgage refinance origination process. The process is indeed rapid: it takes as little as 72 hours versus 60-90 days with the typical consumer initiated dispute process.
The process begins when a mortgage broker prepares a home loan or mortgage refinance application for the underwriter (the lender). The mortgage broker will use a Standard Factual Report to check the borrower's credit score. This is where re-scoring companies can come in and immediately remove derogatory listings disputed by the consumer.
This process worked best when proof was provided that the bad credit history is erroneous or obsolete. Proof that the bad credit should be removed includes letters from the creditor in the case of late payments and, proof of payment in the case of a past due account. We found that consumers with inaccurate or obsolete items on their credit reports such as collection items, judgments, late pays or any other derogatory item that is truly false in some way then they are definitely candidates for rapid re-score:
- Paid collection accounts reported as unpaid on the credit report;
- Judgments or Tax Liens that have been paid or satisfied;
- Accounts that were delinquent but have since been brought current, but are still being reported as "Late";
- Accounts that should be included in a discharged bankruptcy;
- Accounts that have been paid and closed but still show a balance owing;
If no proof is available the consumer can even claim that there are bad credit items they believe to be false and request the credit bureau update the bad credit history, or delete the trade-line. Without proof, the decision to delete the bad credit history is ultimately out of the consumer's hands but the advantages of being able to experience significant credit score increases within hours warrants careful consideration of the service. Particularly when applying for a home loan or mortgage refinance where a slight decrease in interest rate will be significant in the long tem.
