RAPID RE-SCORES
We often do a “rapid re-score” to repair a borrower’s credit for a variety of reasons: (1) to raise a borrower’s score above a minimum requirement, such as 700 for a HELOC or for Jumbo financing (more important than ever in this post-COVID lending environment); (2) to improve a borrower’s interest rate, as rates are significantly affected by credit scores; (3) to update tradelines to reflect lower balances and payments, which will thus lower debt ratios; and (4) to remove “disputes” or derogatory credit that prevents us from obtaining a loan approval.
Our credit reports provide a score from each of the three major bureaus (Equifax, TransUnion and Experian). For qualifying purposes lenders use the middle of three scores, as most people know. If there are two borrowers, we correlate to the lower of the two middle scores.
We have software that enables us do an analysis to see what accounts a borrower can pay off or down in order to increase his score with the least amount of cash. Borrowers can also increase their score by increasing credit limits and/or removing late payments and derogatory info.
Often the credit bureaus are as far as 3 months behind in reporting balances, tradelines, or new credit events. When we do a “rapid re-score”, we pay the bureau to update their record to reflect the most current information quickly (within about a week). “Rapid re-scores” cost $35 to $55 per account, per bureau, depending on the type of supporting documentation provided. Hence, updating or correcting two credit accounts with all three bureaus could cost $200 to $300+.
Note, however, that we often do NOT need to update ALL three bureaus, as we simply focus on elevating the “middle score”. So, we can leave one or even two bureaus uncorrected and still get our desired middle score.
WE CAN’T CHARGE BORROWERS
Regulations preclude us from charging borrowers for rapid re-scores. This makes it difficult to perform rapid re-scores at the pre-approval stage of the loan process; re-scores often cost in excess of $500, and we frequently end up eating that entire fee without closing a loan for the borrower we help (b/c they either end up with another lender or not buying at all). B/c of this, lenders typically only offer rapid re-scores once borrowers are in contract and committed to close with that lender.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
