What is a Rescore?
- July 28, 2022
- Posted by: Mindy Leisure Director of Rescoring Services
- Category: News
A “Rescore” is updating information on a credit report at the bureau level in an expedited manner. It is not credit repair, and it is not something the borrower can do on their own. The changes made through a rescore would eventually organically update at the bureau level but that can take 30+ days or so. A rescore is simply an expedited way of getting one or more accounts updated.
The most common reason for ordering a rescore is to raise the borrowers scores to quality for a better loan. Rescores can also be done to remove dispute remarks or to show balances paid off to have a better Debt To Income ratio (DTI).
A rescore must be requested through a third-party credit reporting agency by the loan officer or processor that the borrower is using to acquire the loan. The loan officer cannot order it directly though the bureaus themselves as they do not have license to work directly with the bureaus. To begin the process, the loan officer must request documentation from the client as to the changes that are to be made. For example, if a balance has been paid down the borrower would need to provide a computer screenshot showing the new balance, the borrowers name, and part of the account number. The borrower could also request a balance letter from the creditor. For removing late payments or getting accounts deleted, we must have very specific letters from the creditor stating the changes that are to be made. Sometimes getting the correct documentation can be difficult. The bureaus will only accept documentation for a rescore from the creditor that is reporting on the credit report. Let’s say there is a charged off Capital One account that they want to show paid. Capital One sold the debt to a third-party collection agency so that is who the borrower thinks they need to get the letter from. However, the bureaus will not accept this for a rescore, they will only accept a letter from Capital One. Third-party letters are not accepted. Normally, with a little persistence, a borrower can get the correct documentation.
Once the loan officer has the correct documentation, they can order the rescore. From there the turn time will be 1-5 business days depending on if the request was ordered as a rush and depending on how busy the bureaus are, as turn times can vary from bureau to bureau.
As stated above a borrower cannot order a rescore on their own. They must go through their mortgage broker. A third-party credit reporting agency cannot work directly with borrowers and a borrower cannot pay for a rescore. A rescore is an expedited dispute process, even if it is just updating a balance. Per the Fair Credit Reporting Act (FCRA) Section 611 it states that any dispute must be processed free of charge. Therefore, a borrower cannot pay for a rescore. The bureaus do charge the reseller (the third-party credit reporting agency) for the rescore who in turn charges their client. But these charges are for doing an expedited update. The borrower could easily dispute anything on the credit report themselves free of charge, but this process can take 30-45 days.
Rescoring is a very valuable service and does yield a high success rate, however there is never a guarantee that the rescore will produce the desired results. There are too many variables when it comes to credit scores to ever be able to guarantee the results. When a rescore is complete a new report must be pulled. Even though the rescore may have been to only show one balance paid down other accounts could have reported organically and a higher balance could show up on another account or a new late payment which could cause the scores to not do what was anticipated. There is no way to pull just the one account that was updated when a rescore is complete. The whole bureau must be re-pulled.
Another thing to note is that if a loan officer is working on a loan for themselves, they cannot order a rescore on themselves. This goes back to the FCRA directives that a borrower cannot pay for a dispute process. If a loan officer is working on their own loan and needs a rescore done, someone else in their office would have to order it for them.
While a Rescore may not be needed for every borrower, it can be a very valuable tool for those that do need it, especially when time is an issue. The process has helped thousands of borrowers get into a home they might otherwise have not been able to.