Does Credit Score Fixing Work — and Is It the Right Move?
Buying a house is a massive undertaking: You have to research neighborhoods, set a budget and — hardest of all — find the right place to live for the next decade or longer.
On May 1, Fannie Mae implemented changes to risk-based fees on conventional mortgages, impacting those looking to buy a house now or in the near future. Credit score fixing — which can impact your score ASAP — could be vital if you want to access the lowest possible mortgage fees, depending on your score.
Here are three key things to understand about the changes to loan fees on conventional mortgages and credit score fixing.
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No. 1: Credit score fixing isn’t the same as credit repair
Credit repair services are typically offered by private companies for a fee, though they often involve actions that consumers can do on their own for free or at little cost. For example, companies may send letters to your credit card servicers asking to have negative or inaccurate information removed from your credit report.
Credit score fixing — often referenced as a rapid rescore — is entirely different. You have to work directly with a creditor, like your mortgage lender. And instead of changing your score by altering your report, credit score fixing instead gets the credit reporting bureaus to update your report with the most recent information, rather than waiting on their timeline.
Another key difference: While credit repair services may take over a month to impact your credit, credit score fixing may be done in as quickly as three to five business days.
No. 2: Credit score changes reward you for higher scores
Depending on your credit score, you could owe more (or less) than before after Fannie Mae changed its risk-based fees.
Here’s what that could mean for you if you’re planning on getting a mortgage soon, according to Denny Ceizyk, a LendingTree senior writer for mortgages:
- Consumers with credit scores between 680 and 779 will likely pay slightly higher rates with down payments between 5% and 30%
- Consumers with credit scores between 620 and 679 will likely pay slightly lower rates with down payments between 5% and 30%
- The credit score for the “best rates” has been raised to 780, an increase of 40 points from the previous standard of 740
The bottom line is that the better your credit score, the less you’ll pay in fees on your conventional mortgage (compared to those with lower scores). And, according to Ceizyk, borrowers with scores between 620 and 679 aren’t going to be penalized as heavily as before the changes.
No. 3: Credit score fixing could help you save on a mortgage — especially now
Because of the credit score-based changes to loan fees, it could be a great time to take advantage of credit score fixing to save money on your mortgage. That’s especially true considering the multidecade highs for mortgage rates and volatility of the interest rate market generally, Ceizyk says.
A rapid rescore could take just days or weeks to finish. In contrast, other options for boosting your credit score, like paying off your credit cards, could take months or even years. That could be too late, depending on your homebuying journey timeline.
Experienced mortgage professionals could help those interested in rapid rescoring navigate the process. They could also run you through different scenarios, such as paying down a percentage of your debt, opening a new account or waiting a certain amount of time before a late payment or derogatory credit entry loses its negative impact.
“It’s best to do a rapid rescore before you start your house hunt, so your scores reach their best level before you make a home purchase offer,” Ceizyk says. “It can be stressful to try to do this once you’re already under contract, packing up your current home and preparing for your move at the same time.”