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Most consumers are aware that a history of
paying bills late or not at all can hurt one's
ability to obtain a loan. All financial
transactions are recorded by three credit
bureaus and offered to lenders upon request in
the form of a credit report. That report
contains the all-important credit score, which
determines whether or not the borrower is a good
risk for a loan. If you have a poor payment
history, you could be out of luck when you try
to obtain a loan. The same applies if there are
errors on your credit report that suggest that
you may pose a greater risk to the lender than
you really do.
Traditionally, it has taken months to
straighten out problems on a credit report, and
borrowers who are eager to close on a mortgage
or home equity loan may not have months to wait.
What can be done? A relatively new
mortgage-related product known as rapid
rescoring can, in some instances, fix problems
on a credit report in as little as three
days.
We have covered the topic of credit repair in
previous articles. The notion that there are
companies that can fix bad credit reports is a
myth. If you have a history of not paying your
bills, no company you can hire can make that
particular problem go away. The only way to fix
that is to become responsible, pay your bills
and retire your credit card balances. On the
other hand, if you find yourself ready to buy a
home and suddenly discover that there is an
error on your credit report that will impair
your ability to qualify for a loan or your
ability to obtain a good interest rate, there
may be a solution. Companies that specialize in
rapid rescoring work with both lenders and the
credit bureaus to expedite the process of
removing errors from a credit report. It's not
magic; you will need to provide written proof
that the error is legitimate, but once you
submit it to your lender, they can pass it on to
the rescoring company, who will handle the rest
of the transaction. The process is often
completed in three business days, although it
can sometimes take as long as two weeks. Still,
that's a tremendous improvement over the one to
three months it may have taken in the past.
Rapid rescoring has turned out to be a
lucrative business for the companies that
specialize in it, and lenders love it because it
helps more buyers qualify for loans. While it is
a nice service to have available, most consumers
would be better off preventing such errors in
the first place. The best way to do that is to
regularly check your credit report for errors
and keep it up to date. You can obtain a copy
for free from the free credit report Website. In
a pinch, however, rapid rescoring has been a
tremendous last-minute tool for saving borrowers
from being turned away from the house of their
dreams.
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