Credit score still damaged after report error fixed
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Dear Speaking of Credit,
In April 2015, I noticed multiple errors on my credit reports saying I was 30 days late on payments, which killed my credit score, dropping it by 120 points. I disputed the errors with the credit bureau and with the company. The corrections have been made, but my credit score remains low. I need my credit score to go back up to a least where it was before this error because it is affecting a car purchase. How can I get a rapid rescore done? -- Vanessa
Yours is one of those simple questions that require a not-so-simple answer -- a common problem when talking about credit scoring. If you bear with me while I redirect your question a bit, you should come away with not only the answer to your question about rapid rescore, but more importantly, knowledge of how to investigate why your score hasn't rebounded following some error corrections.
Regarding rapid rescore, I'll first point out that rapid rescore is simply a process for speeding up the credit reporting error correction process by moving your dispute to the front of the error correction line at the credit bureau. Despite its misleading name, rapid rescore has nothing directly to do with the speedy calculation, recalculation or re-examination of your credit score. In fact, credit scores are always calculated rapidly and on the fly, meaning that anytime your credit score is requested, whether by you or a lender, a brand-new score is calculated at that moment, using whatever is in your report, at that moment.
Since the errors on your report have been corrected already, you don't need a rapid rescore. Instead, the solution will lie in your ability to identify the factors most responsible for your score continuing to be low despite a now error-free credit report.
I see three possible explanations for why your latest score hasn't returned to where it was before the errors appeared:
- You're comparing apples to oranges by using scores obtained from different credit bureaus using different scoring models or different versions of those models.
- Some additional negative changes appeared on your credit report, preventing your score from recovering.
- Some combination of Nos. 1 and 2. You may be looking at different scores, and there may be additional changes impacting them.
Beginning with the first scenario above, are the credit scores you're comparing coming from the same credit bureau using the same scoring model and version of that model? While the three major credit bureaus -- Equifax, Experian and TransUnion -- and the multiple credit scoring models they use operate similarly, anytime you mix different scoring formulas you can expect differences in the resulting scores. If this is your situation, before going any further, order your current score from the same credit bureau as before, using the same scoring model (FICO, VantageScore, etc.) and version (FICO 9, VantageScore 3.0, etc.) that produced the earlier, higher one.
Then once you're able to look at truly comparable scores, review the reason codes accompanying the earlier score with those applying to the newer score. Reason codes (aka score factors or adverse action codes) represent the scoring calculations that resulted in the largest difference between the number of points possible and the number you actually achieved -- in order of negative impact. In other words, reason codes tell you why your score is not higher, with the first reason listed having the most negative impact on your score, the second reason having second most negative impact, and so on.
So, for example, if the first reason code obtained with the newer, lower, score indicates your credit utilization (card balance/limit ratio) is too high to have earned more points, yet this was not one of the top reasons accompanying the earlier, higher score, it's reasonable to assume that high utilization is now playing more of a negative role in your score than it was before. You can then look to any changes in credit card balances and limits for specific answers to why your utilization has increased.
That's one way to compare scores. But what if the reason codes either haven't changed or their differences still somehow fail to tell the whole story? Here are some other methods to employ anytime you find yourself trying to understand what caused a score to go up, down or stay the same:
- Compare the way each account is reported on the two credit reports providing the basis for the scores in question, looking for any changes, no matter how minor they may seem, such as a recent late payment, higher card balance, lower card limit, new account or additional inquiry. Any one of these occurrences could lower the score without necessarily changing the reason codes you're seeing.
- Look to see if any of your older accounts have been removed or new accounts added to your credit report, as your score may have been hurt due, for example, to the elimination of the long credit history associated with a recently removed older account, higher utilization, or the addition of a newly opened account.
- Check for any older and unused cards that you or the card company may have closed recently, as closed cards with a $0 balance are removed from credit utilization calculations, which can lead to higher overall utilization and a lower score.
Sound confusing? It certainly can be. Considering the many moving parts required to compile a credit report and calculate a credit score, the process of trying to understand exactly why your score has gone up, down or remained the same can be a frustrating experience -- even for the most savvy of credit scoring enthusiasts. Hopefully, putting some of these suggestions into action will help take you to the cause(s) of your score's failure to rebound following those error corrections.
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