When you’re shopping for a mortgage, credit card or other form of debt, your credit score has a significant impact on everything from your approval odds to the interest rate. While the best way to build credit is to pay your bills on time and maintain low amounts of debt, a rapid rescore can help if you’re on the border between being approved and getting denied.
If you’ve recently paid off a collection or paid down a credit card and it hasn’t shown up on your credit report yet, a rapid rescore can quickly get that positive activity factored into your credit score. CNBC Select has all the information you need about how rapid rescores work and when they make sense.
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How a rapid rescore works
A rapid rescore is a service provided by lenders and is most commonly used with mortgage lending. In certain situations, it can help you boost your credit score, which can increase your approval odds or help you secure a better mortgage rate.
Although rapid rescores can cost $25 to $40 per credit report, lenders cover these fees so they’re free for borrowers.
Your credit score is usually based on the information on your credit report from one or more of the three major credit bureaus (Experian, Equifax, TransUnion). When you pay a bill or open an account, that information doesn’t instantaneously appear on your credit report. Credit reports are usually updated at least once a month and your credit score is updated in a similar timeframe.
This lag can be a problem because if you pay off a credit card or other balance just before applying for a mortgage, your credit score may not reflect that activity. A rapid rescore can typically update your credit score in three to five business days.
You’ll have to work with your lender to determine whether a rapid rescore makes sense. It depends on what, if anything, has changed on your credit report or could quickly be changed. That said, focusing on paying down revolving debt is a good place to start. “That’s the problematic debt,” says John Ulzheimer, a credit expert formerly of FICO and Equifax. When you pay revolving debt down, “It’s almost a guarantee that your score is going to go up, or, at worst, stay the same.” You may also identify errors on your credit report and if you have the documentation to have those corrected, a rapid score can quickly reflect that change in your credit score.
You can reduce the need for a rapid rescore by reviewing your credit history before applying for a mortgage and correcting errors in advance. A credit monitoring service that keeps track of the activity of all three credit bureaus, such as Experian IdentityWorks℠ (3-bureau monitoring with paid plans), can help you with this task.
Experian IdentityWorks℠
On Experian’s secure site
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Cost
Basic: Free; Premium: 7-day trial, after $24.99 per month; Family: 7-day trial, after $34.99 per month
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Credit bureaus monitored
1-bureau credit monitoring, alerts and reports: Experian, with Basic plan only and 3-bureau credit monitoring, alerts and reports: Experian, Equifax and TransUnion®, with Premium and Family plans only
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Credit scoring model used
FICO® Score 8, with all plans
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Dark web scan
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Identity theft insurance
Yes, up to $1 million with all plans
Pros
- Free version available and free trial with paid plans
- 3-bureau credit monitoring, alerts and reports
- Free FICO® Score 8
- Dark web scanning
- Up to $1 million identity theft insurance coverage
Cons
- Pay for more advanced features, starting at about $25 per month
*Identity Theft Insurance underwritten by insurance company subsidiaries or affiliates of American International Group, Inc. (AIG). The description herein is a summary and intended for informational purposes only and does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for terms, conditions, and exclusions of coverage. Coverage may not be available in all jurisdictions.
What rapid rescore doesn’t do
A rapid rescore isn’t an answer for every credit woe. If you have a history of late payments or bankruptcy, these won’t be erased or offset by a quick update to your credit report. “You’re not gonna be able to get accurate information removed. It’s not credit repair,” Ulzheimer says.
It also isn’t guaranteed to improve your credit score. A recent missed payment or a closed line of credit could all negatively impact your credit score with a rapid rescore. Even if your credit score is increased, that increase may not have a tangible impact on your mortgage rate or application. So it makes the most sense if you’re on the edge of qualifying for a mortgage or a better interest rate.
Find the best credit card for you by reviewing offers in our credit card marketplace or get personalized offers via CardMatch™.
Other ways to improve your credit score
When it comes to improving your credit score, the best way is to consistently pay your bills on time and in full. However, not every bill you pay is reported to the credit bureaus. Revolving accounts (credit cards, etc.) and installment loans (student loans, mortgages, personal loans, etc.) are reported to the credit bureaus and can help build your credit history if you pay them on time. So the type of bill you’re paying matters.
If you have poor or no credit, opening a secured credit card is one way to build your credit report. Secured cards, such as the Discover it® Secured Credit Card, are easy to get because you make an upfront deposit to qualify. Once you have the account you can build your credit by paying the full balance every month by the due date.
Discover it® Secured Credit Card
On Discover’s secure site
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Rewards
Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus earn unlimited 1% cash back on all other purchases.
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Welcome bonus
Discover will match all the cash back you’ve earned at the end of your first year
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Annual fee
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Intro APR
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Regular APR
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Balance transfer fee
3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
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Foreign transaction fee
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Credit needed
Some services add certain types of activity to your credit report, such as *Experian Boost® and eCredable Lift®. With these tools, you can add payment history for utilities, streaming services and other bills to your credit report. But there are limitations and mortgage lenders aren’t likely to consider credit scores impacted by these services.
Experian Boost® affects your Experian report and eCredable Lift affects your TransUnion report. You also need to carefully consider how you use these. Experian Boost only adds positive information, but with eCredable Lift you could have negative or positive information added to your credit history.
Experian Boost®
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Cost
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Average credit score increase
13 points, though results vary
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Credit report affected
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Credit scoring model used
Results will vary. See website for details.
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Bottom line
A rapid rescore is a service some lenders offer that can help boost your mortgage approval odds by recalculating your credit score. However, it’s not always beneficial, so it’s important to discuss with your lender whether it will make a difference in your situation.
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*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
For rates and fees of the Discover it® Secured Credit Card, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
