Credit Scores are now more important than ever. We have some lenders that will not even accept High Balance Conforming Loans (loan amounts above $417,000) if the middle credit score is below 700.
Each of the major credit bureaus (Equifax, Transunion and Experian) has its own scoring models, but all are very similar. Almost all lenders correlate to the middle of the three scores provided by the three credit bureaus, irrespective of which bureau provides which score.
If a borrower’s score is too low to qualify or to garner favorable rates, we have software that allows us to do an analysis on a borrower’s behalf to see what accounts he can pay off or just pay down in order to increase his score. Borrowers can also increase their borrowing limits to increase their scores. Paying off collection accounts often does very little to increase a score. But, eliminating late payments or derogatory information can really raise a score.
Our analysis tells us the minimum amount a borrower can pay down an account in order to give us the maximum score increase. After a borrower pays down an account, he needs to provide us with an updated statement from the creditor that reflects the revised balance. Paying down an account and getting a new statement takes from 1 to 3 days, and then getting the bureaus to update their records via the “rapid re-score process” takes another 3 to 5 days.
A “rapid re-score” costs about $30 per account, per bureau. Hence, updating two accounts with all three bureaus would cost $180. Note, however, that we often do NOT need to update ALL three bureaus, as we simply focus on elevating the “middle score”. Call us if you have questions.
Call Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646