How to Quickly Fix Credit to Get the Best Mortgage Loan

Mistakes on credit reports can take weeks, if not months, to fix - even when the lender or credit reporting agency acknowledges the error. When you're under a deadline to close a mortgage, though, you don't always have the luxury of time. There is a way to speed up the process, but it's not well known, even among many mortgage professionals.

"Rapid credit rescoring" is a service offered by loan officers through residential mortgage credit reporting companies. It allows loan officers to help consumers fix mistakes on credit reports in days or weeks, instead of months. The credit reporting companies that offer this service have special dedicated access to the major three credit reporting agencies that allows them to make changes to credit reports and recalculate the score within days, instead of the weeks it can take going through traditional channels. Most of the specialized mortgage credit reporting agencies that supply this service also offer a service that can help determine which changes may help improve the score.

Rapid rescoring is not designed to be a "credit repair" program, although some companies that offer this service will make suggestions for actions that can boost the score, such as paying down a credit card that is close to its limit. It is designed for situations where there is wrong information on the credit report that must be fixed quickly. To use this service, you must get the correction in writing from the furnisher reporting the mistake, usually in the form of a letter signed by the lender authorizing the correction, on its letterhead.

Because it can be very difficult to predict what effect a particular action will have on the credit score, it's best to use this in conjunction with a service that analyzes the credit score and makes recommendations for improvements. A case in point: I spoke to a loan officer whose client paid off a credit card, thinking it would boost her score, but it didn't. Consumers also may believe that paying off a collection account will increase their scores, but that is typically not the case.

Rapid rescoring isn't cheap. It can cost between $30 and $120 to fix a single mistake with a single credit agency, and the loan officer may not be able to pass the cost of this service onto his or her client, either directly or indirectly. So it is important to focus on items that are likely to have the most impact on the score. If you do work with a loan officer that provides this service, make sure you want to get your loan through them. It is unfair to expect them to invest time and money helping you clean up your credit report, and then take your loan elsewhere, with no compensation to them for that effort.

If you have time to correct your credit report, you can do it yourself. Simply follow the dispute procedures provided by the credit reporting agencies when you order your credit report. We recommend obtaining your myFICO Deluxe Kit, which includes your three-bureau credit reports and FICO credit scores, along with the score simulator. The simulator analyzes your personal credit information and answers questions such as, "What happens to my FICO score if I pay off a credit card or open a new account?