Experts: Rapid Rescoring May Help Save Damaged Credit Scores

DALLAS (CBSDFW.COM)- As consumers still feel the effects of the recession late into 2010, many financial experts advise those who watched their credit score nosedive to research rapid rescoring, which often identifies damaging inconsistencies in credit reports.

"Rapid rescoring, used in the right way, gives us the ability to save the consumer money," said mortgage lender Rodney Anderson.

Rapid rescoring is not a quick fix for bad credit. It's a way to improve a credit score by identifying errors and correcting them while telling the consumer which credit cards to pay off when. Both of these, Anderson said, will raise a score significantly. And those who have bought or refinanced a home know how valuable each credit point is.

"You raise your credit score 40 points, you get a better interest rate that could cost you $100 per month," Anderson said. And "$100 per month over a 30 year mortgage is $36,000 (saved.)"

Forney resident Courtney Beene spent the summer planning her wedding. She and her fiancé also found her "perfect little starter home," she said.

The timing aligned perfectly with the former owners of the home: They needed out quickly, and Beene and her fiancé needed in.

Then she got a phone call from her lender, who told her that her credit report showed three unpaid medical bills. Those bills lowered her credit score so much that she failed to qualify for a loan.

"I was hysterical," Beene said. "That's not exactly the conversation you want to have when you've found your house."

To make matters worse, Beene said she was sure she'd paid those two outstanding bills off.

"I don't know how it got there, I didn't know where those bills came from," she said. "I was completely blindsided."

Anderson said he knows how overwhelming these situations can be.

"It can be daunting," the Dallas-based mortgage lender said, "because 79 percent of Americans have at least one error on their credit report."

Normally, changing a credit score takes an average of at least 30 days, which is often too long for hopeful homebuyers deep into the purchasing process.

"Anything in the credit world that can happen in a week or two weeks is extremely fast," said Eddie Johansson, the president of Credit Security Group in Carrollton.

Credit Security Group specializes in rapid rescoring. Johansson said lenders often turn to him when a client's credit is on the line.

"I meet with the consumer in person, go through that credit report, identify where the points are, and then just ask them, 'is this accurate? Is that accurate? Can you pay this credit card down,'" Johansson said.

Part of the usefulness of rapid rescoring is that it turns knowledgeable financial experts into advisers who are able to break down the fastest ways to clean up a credit score.

Johansson explained that some consumers may have a card with a $300 limit, and owe $270 on it. That same person may have another card with a $30,000 limit and $27,000 charged to that. Each card is at 90 percent capacity, but Johansson said that paying off the smaller card will raise the credit score the same amount as paying the higher bill would.

"Credit card debt can easily be 60, 80, 100 points. And it can be just two maxed out $300 cards," Johansson said.

Beene used a similar service and corrected the mistakes on her credit report. She also paid off an overdue bill and raised her credit score 25 points. She did this in enough time to buy the home she wanted.

But Anderson and Johansson warn consumers to be careful of which company they choose. Many that advertise being able to fix "bad" credit can be a scam. Rapid rescoring is a process that only a lender has the right and ability to do.

The process can cost anywhere from $250 to $2,000.