|
Good credit is always critical to obtaining a mortgage. There are three principal credit scoring agencies that compile detailed credit activities on individuals. All of them issue what is called a FICO score, an acronym which is taken from the company whose software indexes credit scores: Fair Isaac and Company. Generally speaking, those with FICO ratings above 700 will be good to go on a standard mortgage, while those with lower scores are going to have problems nailing down a home loan.
Cleaning up Credit-Traditionally a Long Process
If you’ve ever looked at your credit reports from the agencies – Experian, TransUnion and Equifax – then you know two things about them: they are never identical and there is almost always an error of some sort included. There may be a bad debt listed that is long since retired, loans listed as delinquent that have been paid off or other erroneous information. Typically, the process for getting these black marks removed is long and arduous. First a formal letter of request to the creditor, asking that the credit agencies be informed of the error. Then come the follow-up phone calls pleading with the creditor, followed by badgering calls to the credit agency until the mistaken information is finally deleted.
Meanwhile, your bid on a home and the mortgage to buy it has been passed over by the assortment of agents and/or the seller involved and you are out of luck. You have a new FICO score but the home is sold, the interest rates have moved, the mortgage company has changed its minimum qualifications – there are dozens of variables that can knock you out of contention on a home. Credit is the one constant however and it’s a nightmare when a low and undeserved FICO rating stops your home purchase at the eleventh hour.
A New Service to Raise Your FICO Score Immediately
Now however, there are firms called “re-scoring agencies” that have recognized a need and filled it. Loan applicants in the know have a new option, working through their mortgage broker or loan officer: They can get their files corrected and re-scored within 48 to 72 hours. Though participating local credit reporting agencies cannot advertise their re-scoring services to the general public, they often let their mortgage lending clients know about them.
The re-scoring agencies negotiate special contracts with the three repositories, allowing them to obtain "universal data correction" forms from creditors - often within a day or two - and then sending them directly to repositories for immediate correction of the consumer's file. It’s a labor intensive process and it will cost you. Some lenders are charged $30 per item, per bureau, per borrower. A lender or broker trying to save a marginal application from a borrower with a few credit errors on file might be charged $120 or $150 to get a rapid re-score within 72 hours.
Re-scorers Change Interpretation as Well as Errors
A more extensive re-scoring could cost two or three times that amount. But it can be worth it for the borrower and the lender. Many rapid re-scores raise FICOs by 30, 50 or more points, depending upon the nature of the errors in the file. That jump in score, however, frequently pulls a borrower out of the "sub-prime" category, and can save thousands of dollars in interest in fees over the term of the mortgage.
Mortgage Lenders Plus.com is an advertiser supported mortgage directory. Get second mortgage - mortgage refinance content delivered straight to your desktop daily. |
|
|
|
