Credit Supplement And Rapid Rescore To Qualify For Mortgage

This BLOG On Credit Supplement And Rapid Rescore To Qualify For Mortgage Was UPDATED And PUBLISHED On March 2nd, 2020

There are three major credit reporting agencies;

1. Transunion
2. Experian
3. Equifax

Each credit reporting agency is independent of each other and each credit reporting agency has its own formula in calculating a consumer’s credit score.

• Credit reporting agencies update a consumer’s credit report every month
• Paying down credit card balances at the beginning of a month is not updated right away
• Credit reporting agencies will not update credit report until the following month
• Normally, there is a 30 day lag time to have credit report updated

In this article, we will discuss and cover Credit Supplement during the mortgage process.

Credit And Mortgage Process

Borrowers applying for a mortgage or are  currently in the mortgage approval process may not have 30 or more days to wait for the credit bureaus to post updated credit information and have it reflected on a credit report:

• Mortgage lenders do what is known as rapid rescores and/or credit supplement to have credit information updated to the three credit reporting agencies
• This process normally takes three to five business days

Proof Of Zero Balance On Credit Cards

One of the most common things borrowers face is going over the maximum debt to income ratios allowed due to credit card payments:

• If borrowers need to pay off certain credit card balances, lenders will ask to pay off the credit card and provide them with proof of payment from the credit card company
• Lenders will do a rapid rescore and/or credit supplement through a third party credit vendor
• Third-party credit vendor will take proof of payoff from the credit card company and notify the three major credit bureaus and provide them with the proof of payoff
• The credit bureaus will review the proper proof
• They will then update the consumer’s record and post an updated consumer credit report reflecting the changes
• The credit vendor makes sure that the consumer’s correct current  information is reflected on the consumer’s credit report and notifies the mortgage lender

The lender can then proceed with processing the mortgage and continue on with the applicant’s mortgage process.

Errors On Credit Reports

Borrowers errors on credit report such as a judgment that is reporting not satisfied when in fact you have satisfied the judgment can do a credit supplement reflecting that the judgment has been satisfied and paid off.

Same way as the above case scenario:

• Provide lender proof that the judgment has been satisfied
• Lender hires a third party credit services vendor
• Credit vendor takes the proof of satisfied judgment and provides it to the three credit bureaus
• Credit bureaus update the consumer’s credit report and notify the credit vendor
• Credit vendor notifies the lender
• The lender can then proceed with the mortgage approval process

Credit Supplement With Non-Traditional Credit Trade Lines

Borrowers with no traditional credit trade lines and no credit scores can qualify for a mortgage loan by using non-traditional credit trade lines in lieu of traditional credit trade lines.

Traditional credit trade lines are creditors such as the following:

• credit card companies
• auto finance companies
• student loan providers
• other creditors that report a consumer’s credit payment history to all three credit reporting agencies
• Non-traditional credit trade lines are creditors or businesses where a consumer has a credit agreement but does not report the payment history to the three major credit reporting agencies

Examples of non-traditional credit trade lines include:

• gas companies
• water bills
• electric bill
• cellular bills
• insurance bills
• cellular bills
• landlords

Credit Supplement With Using Non-Traditional Credit Tradelines

If the lender will use non-traditional credit tradelines, the lender needs to do a credit supplement so it reflects it on the credit bureaus.

• How non-traditional credit trade lines get done with non-traditional credit trade lines is by providing lender 12 months of canceled checks borrowers made to the non-traditional credit trade lines creditor
• The payment history of the non-traditional credit trade lines creditor needs to be made on time
• Otherwise, it defeats the purpose
• The payment history is then submitted to the three credit bureaus by the third-party credit vendor
• The credit bureaus will report the non-traditional payment history to the three major credit reporting agencies
• Most credit supplements take anywhere between 3 to 5 business days

Home Buyers who need to qualify for a mortgage with a direct lender with no lender overlays on government and/or conventional loans can contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.