Your credit report and credit scores are a major part of your mortgage application.  In fact, they help determine the rate of interest you pay on your loan.  And since the rate of interest drives your monthly payment, managing your credit report so it produces a high score is important to obtaining an affordable mortgage.

A good lending partner will ask to review your credit report 2-3 months prior to your purchase.  That will allow them sufficient time to make recommendations and to correct any issues that may appear.  If there are no current issues, just knowing this fact will allow you to stay on track for your upcoming purchase.

However, it’s important to know that a shift of even a few points in your score can mean the difference between receiving a great rate, a not so great rate ….or getting approved at all.

The good news is that some lenders have access to what’s commonly known as a “Rapid Rescore”, which is an expedited rescoring of your report to help improve your score the few points you may need in order to obtain a better rate and/or loan program.   As an example, raising a credit score from 699 to 720 could result in a .50% reduction in interest rate – on a $400,000 loan, that’s a monthly savings of over $100.00 per month!   For someone with a 623 score, using the Rapid Rescore to improve the score to 640 could be the difference in getting approved at all.

The first step to a Rapid Rescore is to have a credit “simulator” run against your current report.  This simulator will tell you what needs to be removed, paid down, or paid off now in order to improve your score.  As an example, the simulator may show that by paying down revolving debt a few hundred dollars you will net an improvement to your credit score of 5-25 points …which in turn improves your mortgage rate by .25%.

Once you complete the items requested by the simulator and provide proof to your lender, the lender will request a Rapid Rescore of your report. The rescore typically takes 5-7 business days to complete.

It’s important to note that consumers who attempt to dispute items on their own directly with the three credit bureaus (TransUnion, Equifax, Experian) may cause great delays as the bureaus then have 30 days to respond. That process is cumbersome, time consuming and may not result in the added credit points you need.  Remember, the purpose of the Rapid Rescore is to expedite the reporting of any change you make in order to rescore your credit in 5-7 days instead of the 30-90 days it might take waiting for the bureaus to update their system.

Contact your American United Lending Professional today to see if you can benefit from having a Rapid Rescore done for your upcoming purchase or refinance.   908.322.5535, www.americanunited.com

This article was provided by Joe Farella, industry expert and author of the award winning book, “Insider Secrets to Home Buying Success”.  Mr. Farella is also the Executive Vice President of American United Mortgage Corporation, Scotch Plains, NJ.  For questions about your New Jersey home purchase or refinance, feel free to call Joe at 908.322.5423 or via email:  joe@americanunited.com