One of the worst surprises a customer can have is discovering they have a credit score lower than what they thought it should be. It's funny (not the lower credit score part). People who know they have excellent credit, have always paid their bills on time, etc, sometimes get really nervous when their credit is pulled. That's because of what they've heard has happened to other people- the horror stories of discovering erroneous credit information on reports resulting in a dramatically lower score. Or worse yet, identity theft. When one is sitting across the desk from someone who is getting ready to pull credit, a common reaction is anxiety and fear. Even the most logical people can succumb to these misgivings.
Credit repositories' information is only as reliable as the information supplied to them by creditors. This part of the equation is subject to human error. People make mistakes – all the time. Also, people drop the ball, get fired or promoted, and loose ends never get taken care of. These life happenings can result in errors on your credit report that can cost you money. Sometimes it's great.
But there is an answer to this dilemma. Most lenders these days have the ability to rescore your credit profile if there are errors on it. Or maybe you have the cash to payoff some old, lingering black mark. A lender can revise a credit score in this case as well. They should be able to do it quickly. There is usually a fee associated with this service, but at times it's definitely worth it.
Typically it takes 30-60 days for credit updates to hit the credit bureaus via the traditional methods. It could take longer, or never happen if the person in charge of submitting the information drops the ball. In fact, this recently happened to a client of mine. But it has a happy ending.
My client had an excellent credit profile. He was very attention detail oriented, earned an excellent income, and had saved quite a bit of money for a down payment. When he applied for a loan, his credit score was not reflective of his actions. He only had a 679. Still a good score, but his credit score should have been really much higher. When we looked over his history, it appeared that a medical debt had been erroneously accredited to him. He had talked directly with the company, and they were to have taken the actions to address it. But, somewhere along the way, someone got distracted. Instead, this debt ended up with a collection agency. And my customer was not aware. Ouch.
Why was he aware? Well, it wasn't a huge debt, and I don't know how long it had been in transfer limbo between one company and another. And at some point he had addressed it and believed it to be taken care of properly. But it hadn't. Now it was costing him in interest rate. He was obtaining conventional financing which is credit score driven.
The good news is I was able to do a rapid re-score for him. In three days, his credit score jumped to a 762 credit score. And his interest rate dropped from 6% to 5.5%. Big difference, especially over 30 year time.
There's some scary statistic out there on the internet that says 25% of credit reports have serious errors on them that could result in credit approval denial. I'm not sure it's that high, at least based on personal experience. But I can tell you, people see errors all the time. They usually can be corrected pretty easily. So, I guess it's safe to say you should check your credit from a free source at least once a year to review it. Better safe than sorry.