You made the decision to buy a home. Congratulations! Good for you! You have a good chunk of cash set aside for the down payment, you started browsing properties online and maybe you even interviewed a few local real estate agents to set your plan in place to purchase a home this spring. But your plan started falling apart when you talked to a lender to get your pre-approval letter and learned you have "issues". Say what?! You know your credit is good, however, there appear to be mistakes on your credit report! What to do?
One idea is to ask your real estate agent or lender about "rapid rescoring", a fee-based service that is available to accelerate repairs to mistakes on one or more of the accounts listed on your credit report. According to NerdWallet, "As the name suggests, rapid rescoring is a service some lenders offer to help you get credit report errors fixed and your credit reports updated to improve your credit score. This process happens more quickly than if you were to work directly with the credit bureaus — sometimes within a few days."
Of course, you can take matters into your own hands and contact all three credit reporting agencies Equifax, Experian, and TransUnion and eventually, after a steady diet of phone calls to all three call centers, a letter writing campaign and documentation overload, you can probably get the errors removed. This process, however, can take months and delay your plans to get the pre-approval letter you will need from your lender.
Or....you can see if your lender offers rapid rescoring service. It is important to note that you can not apply or initiate rapid rescoring yourself. It has to be ordered by a lender. There is a fee associated with this service, which will run approximately up to $40 per account, per credit reporting bureau.
According to Craig Berry of The Mortgage Reports, "There are three major bureaus, and you might want to update each account with each bureau. So if you have four accounts that need corrected, it would be a total of 12 items included in your rapid rescore. For example, 12 total updates at $40 per update means $480 total. Mortgage lenders and brokers cannot charge the borrower for any part of this cost. As such, not all lenders or brokers offer the program."
If you still don't think this is worth it, then just check our quick math problem. Let's say your current credit score will get you a 5.25% rate on a 30-year mortgage for $450,000. After rapid rescoring, your new credit score qualifies you for a 4.5% rate. The update results in savings of $205 a month or $73,740 in interest over the life of the loan! Yes! That is almost $75,000 in interest you will not pay!
Just remember, this is not credit repair, but correcting mistakes that should not necessarily have ever appeared on your credit report to begin with, or that should have fallen off earlier. Also be beware that if you do pursue this course there are scams out there, so just work directly with a lender who provides this service. Contact LRA anytime to discuss other home buying tips at firstname.lastname@example.org.
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