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Credit Supplement and Rapid Rescore
I am a newer NMLS licensed Mortgage Loan Originator on a broker platform. What is a credit supplement and a rapid rescore and how does it work? How much does it cost and who pays for it. What benefits does a credit supplement and rapid score have?
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This discussion was modified 4 weeks ago by
Stanley Romanowski.
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This discussion was modified 4 weeks ago by
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1 Reply
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A credit supplement is a request you make via your credit reporting vendor asking them to add, verify, or update information that is missing, out of date, or inconsistent on the borrower’s tri-merge report. You’d do this if, for example, a trade line is missing from one of the bureaus, a paid collection or judgment is still showing as unpaid, a balance or payment history is incorrect, or a creditor needs to confirm the status of an account. Both the borrower and the creditor may be required to provide documentation, and at times the vendor will arrange a three-way call with the creditor to confirm the details. The intention is to ensure the credit file is accurate and complete, not to artificially inflate the score.
A rapid rescore is different. It’s used when the borrower has made a verified change to their credit that hasn’t yet appeared on the credit bureau files. This could be as simple as paying down a credit card, paying off a collection, correcting a reporting error, or removing negative information that was reported in error once the creditor has confirmed the error. The credit vendor will send the creditor’s documents to Equifax, Experian, and/or TransUnion. Once the bureaus have updated the file you can pull a new report and score. This typically takes 3-5 business days (though the timing can vary by vendor and bureau). The cost will vary by vendor, by the number of bureaus, and by the number of items you need to update/rescore. A credit supplement is typically $15-$20 each, while a rapid rescore is about $25-$50 per item per bureau. If you’re updating multiple accounts and/or bureaus the total cost can quickly add up. Who pays for the service is up to your broker’s policy. It’s common for the lender or broker to pay for the rapid rescore and the borrower to pay for the credit supplement. Always check with your broker, your credit vendor and your compliance department to confirm the policy before you tell the borrower anything. Never assume you can charge the borrower directly for a rapid restore without checking RESPA, state, investor and company rules. Correcting missing or incorrect information can help to avoid a delay in underwriting and, in some cases, can even prevent a rejection. The main benefit of a rapid rescore is speed. If the borrower is just below a score threshold a rapid rescore can quickly improve their score and get them approved for a loan, get them a better rate, meet a conventional loan requirement or keep their purchase contract on track. A small increase in score can make a big difference in terms of getting a better rate or meeting a lender’s requirement.
Neither of those services is credit repair and neither can remove valid negative credit history. They can’t create a better score out of nothing. What they can do is accelerate or clarify the accurate, verifiable information in the report. If the updated information results in a lower score, that’s the score you’ll get. Before you order either of those services, you must check the report, identify the issue, get the documentation from the creditor, get the borrower’s consent and note the expected benefit. That process protects the borrower, protects your broker and protects your NMLS record.
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