subject: Could Credit Re-Scoring Help Your Credit Score? [print this page] Could Credit Re-Scoring Help Your Credit Score?
Credit re-scoring was first initiated owing to the increasing demand for it from mortgagers. Frequently the credit reports included incorrect and redundant data that affected the consumer's eligibility and interest rates while applying for loans/mortgages. Correcting these errors was a long-drawn out tedious process sometimes taking 30-45 days -- an extremely dissatisfactory state of affairs especially since loans were being processed within as little as 3 days.
The question here is whether credit re-scoring will help you? It all depends on the kind of situation you're stuck in. Credit re-scoring must not be confused with credit repair wherein you have to approach collection agencies and resort to debt consolidation. Credit repair essentially tries to ease a bad credit situation whereas credit re-scoring entails correcting mistakes in the credit report, clearing a few dues and reorganizing your debt so that the balance to credit limit ratio is at the minimal level. If you're in a bad credit situation, credit re-scoring is not going to be of much help. You'll have to do things the hard way -- use hard work and patience to clear your dues.
However, credit re-scoring does help to correct glitches in your 3 credit bureau reports. Getting them corrected on your own is time-consuming as the 3 major credit bureaus take more than a month to make the changes. In contrast, some resellers get them rectified in about 72 hours only.
Re-scoring will help when the credit report contains:
Inaccurate payment history
Account balances that have already been cleared
Delinquent accounts that have become current
Accounts that do not actually belong to the borrower
Old accounts that should not appear on the borrowers credit report
An account where the borrower is an authorized user
Revolving debt accounts (credit cards) where the balance to credit limit ratio is high
In most cases where incorrect information is included in the report, getting a letter from the creditor on his letterhead acknowledging the mistake and noting the corrections is deemed as sufficient evidence to implement changes.
However, incorporating a correction about old balances that have been paid off in full draws attention to them and may cause your scores to plunge rather than rise. There are certain records that should not appear on your credit bureau report after 7 years have passed (eg. Bankruptcy, collection suits, foreclosure etc.) If these records still appear on your credit report, re-scoring can help remove them and as a result enhance your credit scores. FICO scores sometimes mistake "authorized users" for co-signees. If you're an authorized user for a delinquent account, you could be mistaken for a joint user causing your score to drop. A correction made here will also boost your credit score.
On the downside, re-scoring will not be of any help if you're trying to do away with an item that is the subject matter of dispute with your creditor. This is because the 3 credit reporting agencies do not allow modifications to be made regarding these items. What has to be noted is that re-scoring comes with no assurances and guarantees.
Credit re-scoring can certainly help in some cases and cause a staggering increase in scores to avail of top-notch interest rates. But it should not be viewed as a miracle cure for poor credit scores. On an average, credit re-scoring can push up your scores by about 30 points. But in certain cases, tampering with the credit reports can actually cause your credit
