Rescoring Credit Reports - Anyone doing this?

Posted By: Anonymous

Rescoring Credit Reports - Anyone doing this? - 09/07/21 01:44 PM

We are looking into the services offered by our credit agencies we order our reports through and they offer the ability to run what-if scenarios and even to then take it a step further and rescore the credit report after the client has completed what was run in the scenario. We understand that we'd need to have clear procedures and communication with the borrowers on that fact it's not guaranteed, etc. What I'm curious about is if anyone else is offering this type of process to their customers in the mortgage process.

1. We definitely would do this if there is information not accurate on the credit report and the borrower can provide documentation to support said inaccuracies in order to provide the best level of service to our customers we can. This scenario isn't our roadblock.

2. If we run the what-if scenario and it indicates paying down or off certain tradelines and our program parameters allow for it, we'd like to discuss with the client the option of rescoring or waiting the 30+ days to re-run their credit (only if they want that as it needs to be permissible purpose). Anyone doing this? Our Corp. Compliance department is adamant that this is not permissible, even though it could provide benefits to the client; it also poses risk of it not presenting scores based on what was assumed.

3. What is your take on this? I've read and read and it seems to be a grey area and more based on appetite for risk and ensuring we have our processes and procedures in place to make certain we are treating all borrowers the same and only following the guidelines. Am I missing anything that would stop this?

4. I've done the research with the investors and I'm good on that front.

Any positive or negative feedback on this is greatly appreciated.
Posted By: Dan Persfull

Re: Rescoring Credit Reports - Anyone doing this? - 09/07/21 03:14 PM

Any fee for the "rapid rescoring" cannot be passed to the consumer.

Question: We are a lender that has some clients that require their credit score to be rescored via rapid rescore. We order this service through our credit vendor for each bureau that we need updated at a cost of $35 per account per credit bureau. In many cases, these costs can add up quickly. Can we pass this cost on to the applicant?

The short answer is no, you may not directly or indirectly charge the consumer for the rapid rescore.

Rapid rescoring is an expedited process used to update or correct a consumer’s credit file. The rapid rescore process involves the mortgage lender submitting proof from the consumer to the consumer reporting agency that information on the consumer’s report is erroneous. The consumer reporting agency, in turn, presents this information to the three national repositories of consumer information (Experian, TransUnion, and Equifax), also known as the national credit bureaus, for investigation. Depending upon the results of the investigation, the consumer’s credit file is corrected and updated, often within 72 hours as opposed to 30-45 days if the consumer were to go through the normal dispute process.

If you review your contract with your credit vendor, you will, in all likelihood, find a prohibition against directly or indirectly charging the consumer this fee. In turn, the consumer reporting agency’s contracts with the national credit bureaus contain a similar prohibition against passing this fee on to the borrower. The root of this prohibition can be found in the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681.

The Fair Credit Reporting Act sets forth the procedures to be followed if a consumer disputes the completeness or accuracy of any item of information contained in a consumer’s file at consumer reporting agency. In instances in which the consumer directly notifies a national credit bureau of the dispute or indirectly, through a reseller such as the credit vendor, the bureau must investigate the dispute within thirty days of receipt of notice of the dispute at no charge to the consumer. [15 U.S.C. § 1681i(a)(1)(A)]

However, nothing prevents the bureau from charging the consumer reporting agency for expediting the dispute process, which charge the credit vendor then passes on to the mortgage lender. However, in light of the foregoing FCRA provisions, the mortgage lender cannot pass the charge on to the consumer.

Charging a consumer for a repaid rescore can have harsh consequences, including termination of access to credit reports. Additionally, for a willful violation, the lender can be held liable for actual and punitive damages. [15 U.S.C. § 1681n]
Posted By: Anonymous

Re: Rescoring Credit Reports - Anyone doing this? - 09/08/21 02:21 AM

Thank you Dan for this information. It's very useful in preparing our procedures for this. I'll have to re-read our contracts though because I don't recall it saying anything about not allowing us to pass on the cost. I believe what you've provided, but concerned what I have might be outdated, so I will need to follow-up with them on that fact.

Much appreciated!
Posted By: Dan Persfull

Re: Rescoring Credit Reports - Anyone doing this? - 09/09/21 06:16 PM

Rapid rescore is basically the expedition of solving a dispute within 3-5 days instead of 30 days.

(a)Reinvestigations of disputed information
(1)Reinvestigation required
(A)In general
Subject to subsection (f) and except as provided in subsection (g), if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.