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Some credit scores are too bad to get rescoring boost

"Rapid rescoring" of your credit file can be the key to getting a home mortgage at the best rate, provided you're a good candidate for a score boost in the first place.

But you may not be. If you've got a low score because you've consistently stiffed creditors or paid debts late, forget it. You're not in the ballpark. Rescoring cannot change a bad credit history. But if entries in your credit file are incorrect, a rescore effort may well produce important results for you. The same is true if you've maxed out a couple of credit cards and can transfer some of that debt to other, less-used credit lines.

A Baltimore credit agency executive who specializes in helping mortgage applicants says there are a handful of situations where rescoring may be particularly successful. According to Ruth Koontz, vice president of Lenders' Credit Services Inc., you have a good shot at raising your FICO score if your files at Equifax, Experian or Trans Union contain:

Any type of erroneous payment history information. Creditors sometimes make mistakes in reporting payment histories to the repositories, and those errors can depress your FICO score substantially. Once you spot an error, inform the credit agency doing your rescoring. The agency, not you, will then contact the creditor and request either a signed letter stating what the correct payment history should be or a Universal Data Correction form that creditors routinely send to repositories.

An aggressive rescorer usually can contact the creditor and obtain the needed correction, if warranted, within a few business days. The correction is then sent directly into the repositories' electronic data files and should boost any subsequent score pulls.

"Delinquencies" showing on accounts that either can be paid off or weren't delinquencies in the first place. Here again, the rescorer obtains a Universal Data Correction form from the creditor or a signed letter confirming the payoff of balances in arrears.

Accounts on an applicant's file showing balances that don't belong to the borrower or don't belong in the file. For example, say you paid off a debt to a creditor just before the creditor referred the account to a collection agency. The creditor may not have reported the payoff yet, while the collection agency reports the non-payment as an open case.

Accounts that were included in a bankruptcy settlement but that are listed in the file as delinquent or charged-off. With a copy of the bankruptcy discharge order or some proof from the creditor that the debt was covered by the bankruptcy settlement, the score can take a solid, multipoint jump.

Credit accounts that show heavy use of the available credit limit, such as maxed-out credit cards, home equity lines and personal credit lines. Koontz says "when a (credit report) contains too many open accounts or accounts that have high balance-to-credit (limit) ratios, the solution is to pay off as many of them as possible, or pay them down as low as possible."

How low is low? Koontz says she's gotten the best results "when the consumer pays the account to less than 50 percent of the credit limit." Richard Lefebvre, a Flagstaff, Ariz., credit agency executive, says 25 percent to 33 percent ratios are a good target, if the consumer can restructure his or her credit accounts. That may mean transferring the $900 balance on a $1,000-limit credit line to another with a $10,000 limit. The $900 on the $1,000-limit account is treated as a negative by the FICO score model. The same $900 on a $10,000-limit card, by contrast, looks like responsible management of credit.

Missing accounts, containing on-time repayment histories. Some businesses may only report your account information to one of the three repositories. Others may report to none. Yet with the missing, favorable account information added to your credit file, your score could be higher. Rescorers such as Koontz sometimes can obtain a letter from a creditor to create a new credit reference on your repository file. But generally, the repositories won't add information except from their current subscribers; that is, businesses that send in at least some information already.

This means that your account at "Jane's Boutique on the corner cannot be added," Koontz says, "while (missing) references from JCPenney and Sears could be added."

Rescoring your amended credit file could boost your FICO by a few points, 200 points, or anywhere in between. If you think you're a rescoring candidate, ask your lender to contact a qualified credit reporting agency. The agency must have special rescoring contracts with the repositories, and will charge your lender a fee for the service, generally less than $100.

_ Washington Post Writers Group