Rapid Rescore

[Anonymous]

Hi,

I am currently 6 points from the 640 credit score to be approved for an FHA mortgage. I am doing a rapid rescore as I've paid down 2 of my cards to 0 and the other 2 are under 46% now.  I'm hoping I can get those 6 points.  My real estate agent said to be careful of rapid rescore as often scores will adjust and if they go under I won't be approved when they do the final pull.  Does anyone know why the scores would change as long as I do not apply for more credit and continue to pay down my cards.  

Thank you for any insight on this experience.

[Mortgage-Specialist]

Everyone's individual credit profile is unique to them. There's not a cookie cutter response that works exactly the same way for everyone. Most likely your score will increase (not decrease) but I've seen both happen or simply stay the same. 

The way to know for sure what your scores will increase to prior to doing anything is by using a credit simulator. These usually go hand in hand with rapid rescore. Id like to assume your LO ran the simulator, found what your scores will increase to, then told  you what accounts to pay down and how much. The simulators that LO's utilize are very accurate. 

Based on your scenario, I would think that your score would increase by over 6 points after what you paid off.

[Anonymous]

Thank you very much for your reply. It's definitely nerve wracking when getting this close and don't want to make another mistake.  I was so disappointed when FHA raised their numbers again due to the Covid, it put all the plans on hold.  

I'm learning a lot from these boards, so thank you!

[VALoanMaster]

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@Anonymous wrote:

Thank you very much for your reply. It's definitely nerve wracking when getting this close and don't want to make another mistake.  I was so disappointed when FHA raised their numbers again due to the Covid, it put all the plans on hold.  

I'm learning a lot from these boards, so thank you!

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Hi @Anonymous ,

Just to clarify, FHA did not raise their minimum credit score requirements, lenders did. 

I still have investors that go down to a 580 score but the rates are not pretty & you still have to get an approval through an automated underwriting system.

As far as the rapid re-score goes, it's still a bit of a gamble because there is a chance that something could hit in between when the 1st report was pulled & when the new report is pulled for the re-score.

[Anonymous]

Hi,

 I had a friend whose score was in the mid 600's.  She did a rapid rescore and it dropped 50 points.   I don't know all the details but wanted to mention.  Have you checked the items that  you paid down to see when they update on your report?  It's usually the day after your statement prints. You can check the last report date on credit karma or call the company.  I would wait until that date, pull it on myfico to make sure it's updated and you see an increase on the mortgage model and then have the lender pull it.

[Mortgage-Specialist]

When certain things are removed or deleted from the credit report, it can cause the score to drop. I know it sounds illogical but there are times when a collection is removed from the credit and causes the scores to decrease. 

If the LO uses the credit simulator, they can tell nearly exactly what the scores will increase or decrease to prior to using the rapid rescore and making the appropriate changes. If the LO is knows what they're doing, the score will never drop and the proper expected results will take place - since the simulator tells you in advance what will happen. 

[VALoanMaster]

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@Anonymous wrote:

Hi,

 I had a friend whose score was in the mid 600's.  She did a rapid rescore and it dropped 50 points.   I don't know all the details but wanted to mention.  Have you checked the items that  you paid down to see when they update on your report?  It's usually the day after your statement prints. You can check the last report date on credit karma or call the company.  I would wait until that date, pull it on myfico to make sure it's updated and you see an increase on the mortgage model and then have the lender pull it.

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Your friend had something derogatory hit their credit in between the first credit report pulled & the report pulled after the re-score.

[Anonymous]

Hi,

The rapid rescore did not happen as the company found a dispute listed on the credit report and would not do the rapid rescore. The dispute is from 2011. I'm now trying to call and have the dispute statement removed. The account is in good standing, so I'm not sure why it is there. Hopefully calling will help and I don't have to write a letter to have the statement removed. 

[VALoanMaster]

Hi @Anonymous,

The disputed account shouldn't matter as long as you meet the following FHA guidelines:

Disputed Derogatory Credit Accounts (TOTAL)
(1) Definition
Disputed Derogatory Credit Account refers to disputed Charge Off Accounts,
disputed collection accounts, and disputed accounts with late payments in the last
24 months.
Exclusions from cumulative balance include:
 disputed medical accounts; and
 disputed derogatory credit resulting from identity theft, credit card theft or
unauthorized use. To exclude these balances, the Mortgagee must include
a copy of the police report or other documentation from the creditor to
support the status of the accounts.
(2) Standard
If the credit report utilized by TOTAL Mortgage Scorecard indicates that the
Borrower has $1,000 or more collectively in Disputed Derogatory Credit
Accounts, the Mortgage must be downgraded to a Refer and manually
underwritten.

[Anonymous]

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Thank you for the information. It's very confusing all of the different rules. 

They still won't run the rescore unless disputes are removed. I've had luck with Transunion and Experian on the phone and will remove. I can't get in touch with a person on the phone with Equifax. I'm goint to send them a letter and hope for the best.

#VALoanmaster, if I have a charge off for $5000 it will automatically be put to manual underwriting?