If you’re preparing to make a big purchase like a new home, chances are you need to take out a loan. And to get the best interest rate and most favorable terms, your credit needs to be in tip top shape. 

However, the reality is that your credit score may not be as high as you would like it to be.

While there are plenty of things you can do to improve your score, they require time and patience—two things you might not have if you’re ready to close on a new home or finance some other type of large purchase.

This is where rapid rescoring might help.

What is rapid rescoring?

Rapid rescoring is just that—a quick recalculation of your credit score.

In most cases, you’ll see rapid rescoring offered by lenders that offer large, complex loans like mortgages.

And when you’re borrowing a large sum of money, even a small boost to your credit score can make a significant difference, which is why mortgage lenders sometimes offer rapid rescoring as a way to quickly clean up errors on your credit report.

If you know you’ll be applying for a loan, you might pay off some debt in advance with the hope of boosting your credit score. But this takes time for these payoffs to show up on your credit report: 

• First, the creditor must receive the payment.
• Then it must post the payment.
• From there, the creditor must report the payment to the credit bureaus.
• Finally, the credit bureaus must update their information.

You can see how all these steps can take months to complete. By using rapid rescoring, lenders accelerate these steps and cut straight to the updated credit score.  

Unlike other methods for fixing errors on your credit report, you can’t ask for rapid rescoring on your own. Rather, rapid rescoring is almost always offered by mortgage lenders, who work directly with the credit bureaus to obtain a quick recalculation.

If you come across a company promising fast results for a fee, it’s important to be wary.

So what kind of scenarios are right for a rapid rescore?

Here are two examples:

Paying down your balances

As you prepare to apply for a mortgage, your mortgage broker lets you know you can receive a more favorable interest rate if you can add about 20 more points to your credit score. You’re almost there, but not quite.

Based on models your broker runs, you think you can boost your score if you pay off a couple of credit cards, so you gather enough cash to pay off the cards.

Your broker uses rapid rescore to obtain an updated credit report that reflects your score now that you’ve paid off the credit cards. 

Disputing an error on your credit report

You pulled your credit reports before you started house shopping, and as you reviewed them, you flagged an error.

Disputing the error on your own could take a few months, so your mortgage broker uses rapid rescore to dispute the item and update your report much faster than you could on your own. 

How rapid rescoring can help you

Generally, rapid rescoring is best suited if your credit scores are within close range of qualifying for a better interest rate on a home loan.

In most cases, there is no mystery involved in rapid rescoring—this is because you, as the borrower, should already be able to prove that your credit report contains an error.

Likewise, if you’re using rapid rescore to obtain an updated score after paying down debt or taking other steps to improve your credit, your mortgage broker or lender should already anticipate how your actions will affect your credit score. 

Let’s take a real-life, concrete example of how getting a credit score increase via rapid rescoring can save you more than $10,000.

Let’s say your credit score is 710.

While this is a good score, your mortgage lender says you could qualify for a lower interest rate on a $250,000 mortgage if you raise your score by 50 points, taking it to 760.

If you stay at 710, your interest rate will be 4.234%, with monthly payments of $1,228 and a total of $191,903 paid over the life of the loan.

By raising your score to 760, however, you’ll pay 4.012% in interest, drop your monthly payment to $1,195, and pay $180,297 in total interest.

Improving your score by 50 points may not seem like that big of a difference, but it will save you $11,606 on your mortgage.

When you do the math, it’s easy to see how rapid rescoring can be worthwhile.  

When rapid rescoring won’t help you

Mortgage lenders can usually predict how a rapid rescore will turn out, but they run simulations based on what’s likely to happen given the information they have at the time.

However, scoring models aren’t perfect, and borrowers might overlook a potentially negative item that could end up posting early to their credit reports. 

For example, you might pay off a credit card in an effort to improve your credit score, but a quick update to your credit report might also allow some new negative information to show up earlier than it would have without the rapid rescore. This can cancel out your card payoff, and it might push your score even lower.  

It’s also possible that your dispute will fail, or that an item you thought was a mistake will turn out to be accurate. 

In other words, rapid rescoring isn’t a shortcut to getting negative items removed from your credit report. If a negative item is accurate, rapid rescoring can’t do anything to budge it. 

If rapid rescoring won’t help in your case, don’t give up. There are a number of other ways to improve your credit score.

Pay down your credit card balances

Credit utilization, which is the percentage of available credit you’re using, makes up 30 percent of your credit score (you might also hear it called a balance-to-limit ratio).

Generally, your credit utilization should be around 30 percent, and anything higher can make you seem like a bigger risk to lenders.

The easiest way to improve your credit utilization is by paying down some of your credit card debt. 

Settling delinquent accounts

If you’ve missed payments, or you have an account that’s ready to get turned over to a collection agency, paying it off can help improve your score. 

More importantly, it can prevent your credit score from sinking even lower. 

Keeping credit card accounts open

Some people mistakenly believe that closing their credit card accounts will help raise their credit score.

On the contrary, closing these accounts shrinks the amount of total credit available to you, and it can also damage your credit history.

If you no longer wish to use a card once it’s paid off, it’s okay to cut up the card itself—just make sure you keep the account open.   

How to use rapid rescore

If you’re interested in rapid rescoring, ask your mortgage lender or broker if they offer it—they can give you a good idea of what actions you can take to make rapid rescoring worthwhile. 

Of course, not every lender offers rapid rescoring.

In this case, you can either shop around for one that does, or you can hold off applying for a loan while you work on boosting your credit score on your own. 

How much does rapid rescoring cost?

Rapid rescoring doesn’t cost you anything!

Under the Fair Credit Reporting Act (FCRA), mortgage lenders can’t charge consumers for rapid rescoring, either directly or indirectly.

In practice, though, many mortgage lenders find a way to incorporate the fee for rapid rescoring into the loan’s closing costs. Rapid rescoring isn’t free for lenders, and it can cost around $30 per updated account.

When you spread this over three credit bureaus, it’s easy to see how the total cost can climb quickly. 

While lenders typically won’t tell you where they “hide” rapid rescoring expenses in the loan fees, most borrowers consider the extra charges well worth the benefit of saving thousands on interest.  

How long does it take to get a rapid rescore?

With a rapid rescore, you can expect results as quickly as 72 hours, although it can take up to a week to receive your updated credit score. 

Your lender can usually give you a good idea of what to expect in terms of a timeline. 

Rapid rescore alternatives

Rapid rescoring isn’t an option for everyone, and not every mortgage lender offers it.

The good news is there are other ways to improve your credit without putting your borrowing plans on hold.

1. Shop around for a different lender

If you can’t seem to qualify for a loan with one mortgage lender, don’t be afraid to try with a different one—you may find a different lender more willing to work with you, even if rapid rescoring won’t improve your credit score. 

2. Use cash to pay off other loans

If credit card debt or another loan balance (such as a private student loan) is lowering your score, pick a debt and focus on paying it down as much as possible.

Pay double the minimum payments for several months, or use some cash from savings to pay off a credit card or a loan balance—this may improve your credit score enough to help you qualify for a mortgage. 

Planning ahead

Rapid rescoring can be extremely helpful when you need to improve your credit score in a hurry. However, it’s not always available, and it can even hurt your score if you have unexpected negative items ready to pop up on your credit report.

If you’re thinking about shopping for a new home in the future, one of the best things you can do is start improving your credit score now.

The sooner you review your credit reports and start disputing errors, the faster you can boost your score and begin your home search.