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When you apply for a home loan, your mortgage lender may require you to pay off any past-due debts or outstanding loans before approving your loan application. Rapid rescoring is a process lenders use to have new payment information added to your credit reports quickly—potentially increasing your credit score and improving your loan eligibility.
How Rapid Rescore Works
With a rapid rescore, a mortgage lender pays a fee to the credit reporting company (Experian, TransUnion or Equifax) to have recent account changes updated to a loan applicant's credit report in an expedited time frame.
Normally, after you make the necessary payments to pay down or pay off an account as requested by your mortgage lender, it may take a full billing cycle or two for your creditors to process those payments and report the information to the credit reporting agencies. Only credit scores calculated after the updates have been made to your credit report will reflect the changes to your accounts.
Because mortgage loans are often time-sensitive, a mortgage lender may prefer to pay a fee to have an applicant's payment information updated more quickly. The lender submits proof of the recent payment updates, such as paying off or paying down debt accounts, to the credit reporting agency so the new information can be updated more quickly and help expedite the lender's mortgage approval process.
Once the credit report is updated, the lender can request a new credit score that will reflect those updates and ideally result in a higher score. This service is offered only through your lender—you cannot request a rapid rescore on your own.
How Long Does Rapid Rescoring Take?
How long a rapid rescore takes can depend on your mortgage lender and other creditors.
Once you have made payments to your credit accounts, those creditors will first need to update the accounts to reflect the new balance or payment status. Next, your mortgage lender will need to obtain proof of the changes from you so they can provide the updated information to the credit reporting company.
Once the mortgage lender begins the rapid rescore process with the credit reporting agency and submits the necessary documentation, it is often completed within two to three days.
Is a Rapid Rescore Something I Should Consider?
A rapid rescore is usually recommended by your mortgage lender when your current credit score falls a few points below the score needed to qualify for a better rate or loan terms. Even a small change of a fraction of a percentage point in your mortgage interest rate can save you thousands of dollars over the life of the loan.
If you have a current credit score that is relatively close to the score the bank says you need, and the means to pay down your debts, it may make sense to ask your lender to take advantage of a rapid rescore option to save money on interest and fees.
It's important to keep in mind that paying off or paying down an account may not always result in a credit score increase. There are many different factors that go into a credit score calculation, and each individual's credit situation is unique.
For example, if a high utilization rate is one of the more significant factors impacting your scores, paying down a large credit card balance has the potential to increase your scores right away. However, if your utilization rate is already relatively low or the payment you made doesn't significantly change your balance-to-limit ratio, you may not see a change to your scores once the balance is updated.
Similarly, while paying off debt is always a good thing, any major change to your credit history, such as paying off an installment loan, may result in a temporary dip in scores until your credit history has stabilized.
The Bottom Line
It's important to remember that your credit reports are continuously changing as lenders report updates to your accounts. In the time it takes for the rapid rescore process, there may be other changes or updates to your credit history that can also cause credit scores to fluctuate.
You can see what your lenders are currently reporting by requesting a free credit report directly from Experian.