A federal district court has given a boost to "rapid re-scoring" of home buyers who discover errors on their national credit bureau files when they apply for a mortgage.

In a major defeat for credit bureau giants Equifax, Experian and Trans Union, a U.S. District Court in Santa Ana, Calif. refused to dismiss class action suits filed against the national bureaus by two dozen independent, local credit reporting agencies. The independents charged that the national bureaus -- which dominate collection, storage and sale of consumer credit data on over 180 million Americans -- have conspired illegally to drive them out of business through predatory pricing and unfair trade practices.

The independent credit agencies are important resources to home buyers and other mortgage applicants because they are specialists in a service known as "rapid re-scoring." Rapid re-scoring allows loan applicants to get erroneous, outdated and incomplete information corrected or deleted from their national credit files within 48 to 72 hours -- far faster than the 30 to 60 days or more typically required when a consumer directly requests corrections from the bureaus.

The independents perform their re-scorings on behalf of mortgage loan officers or brokers who want to help boosts applicants' scores enough for them to qualify for a needed interest rate or lower fees. Re-scorers do not do "credit repair." They can only boost an applicant's scores when information in the files is erroneous or incomplete. Re-scorers are prohibited by the national credit bureaus from charging consumers directly for their services; they can only be paid by a lender or broker.

That prohibition, in fact, was one of the complaints lodged by the independent agencies in their antitrust and unfair trade practices suits against the national bureaus. By banning direct payments, the independents told the court, the national bureaus have tried to limit the attraction of rapid re-scoring to lenders, who must bear the costs themselves rather than pass them along to clients.

The independents also charged predatory pricing by the national bureaus. For example, according to one plaintiff, the bureaus raised the wholesale price of credit file data to his firm to a level that is now five times what the bureaus charge on a retail basis to the independent agency's smallest bank customers.

Such skewed pricing is "clearly designed to discourage people from wanting people to do business with us," said Paul Wohkittel, CEO of Lenders Credit Services, Inc. of Baltimore, MD. As the direct result of unfair pricing, plus aggressive acquisitions of independent agencies by the bureaus, the number of independent credit reporting firms has declined from over 1,000 in the early 1990s to less than 200 last year, the class action suits charged.

Re-scorings are staff-intensive activities, said Wohkittel, something the highly-automated national bureaus are not set up to handle.

"Call up any one of the (national bureaus) to get something in your file corrected and see what happens," he said. "See if you can get a live person on the phone. You won't." That is unless you claim identity theft.

Rapid re-scorings, which can cost $30 to $50 per "tradeline" or account that needs correction, frequently can raise home buyers' scores by 30 to 100 points and higher, depending upon the severity and number of errors. Re-scorings can also help spot key omissions in applicants' files, such as non-reported account information by credit card companies like Capital One, or missing student loan data from SLM Corp., formerly known as Sallie Mae.

The district court ruling did not decide on the merits of the independent credit agencies' accusations of conspiracy and predatory pricing. But it sent the case to trial or settlement. According to participants in the case, preliminary settlement talks already have gotten underway.