For many of us, our credit scores are not at the, shall we say, “altitude” they once were. The economic meltdown of the last few years has taken its toll.
The Fair Isaac Corp, creator of the FICO score system, reports that more than 25% of all consumers with active credit files now fall below a 599 on the FICO scale, making them unacceptable to traditional lenders and less attractive to hard money lenders. However, equity is often deemed more important than credit scores when qualifying for a hard money loan.
If your credit score is limiting your opportunity to purchase or refinance property and you need to complete the transaction in less than 30 days, you might consider “rapid rescoring”. Most mortgage brokers can help you get started.
“Rapid rescorings” are performed by independent credit reporting companies, which use procedures approved by the major credit bureaus to make direct changes to your credit file.
Credit rescorers will link you, your creditors, and the national credit bureaus to correct errors and omissions that could be bringing down your score.
Rescorers can also analyze your credit file and, in some cases, make suggestions on spending that will quickly give your credit score a boost.
Most legitimate rescorings take about a week, and cost the borrower an average of $30 per account in your file. A complete rescoring runs $90 to $200 or more.
Most importantly, be realistic about what credit rescoring can do for your FICO score. Rescorings can make a significant difference, but the average increase is 25 to 32 points.
But that could be enough to allow you to qualify for a loan, if not from a traditional source, then from a hard money lender.
And ignore the “credit repair” schemes and scams that are out there, promising to improve your FICO score overnight. They can’t, and in some cases their methods may not even be legal.
- Carla Palmer
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