Posted on: 21st Jul, 2009 12:14 pm
How does a loan modification affect your credit score?
i haven't seen an analysis on that yet, but a simple loan modification wouldn't seem to me to be something that ought to have much effect.
I have to agree with George. On a personal note, I had my loan modified earlier this year. I simply paid a fee to have my rate reduced. There is no way that will even register on my credit report.
an add-on to the discussion. in years past, modification of a mortgage was not the major issue that it is in this economy. lenders and borrowers would agree on a particular scenario and simply draw up documentation that modified the existing loan; then recorded that documentation in the land records.
for example, we might have made a 7% fixed rate to someone on a 30-year mortgage. a few months or even several months later, rates might have dropped to 5%. rather than lose business by allowing that customer to go elsewhere and refinance, and instead of going through the refinancing process (time consuming and expensive), the two parties might agree on a modification that reduced the rate. there might be a nominal fee for this process, and of course there was a recording fee.
in no way did the fact of modification seep through to credit agencies. inasmuch as the only thing that would change for credit-viewing purposes was the monthly payment, the information sent to bureaus simply reflected that.
some of us remember those days.
for example, we might have made a 7% fixed rate to someone on a 30-year mortgage. a few months or even several months later, rates might have dropped to 5%. rather than lose business by allowing that customer to go elsewhere and refinance, and instead of going through the refinancing process (time consuming and expensive), the two parties might agree on a modification that reduced the rate. there might be a nominal fee for this process, and of course there was a recording fee.
in no way did the fact of modification seep through to credit agencies. inasmuch as the only thing that would change for credit-viewing purposes was the monthly payment, the information sent to bureaus simply reflected that.
some of us remember those days.
Hi Guest,
Loan modification can affect your credit score. September 2009 onwards, lenders can report a loan modification to credit bureaus as "partial payments". Reporting loan modification as partial payments will be considered as a negative mark on your credit report. Depending upon your credit history, this can lower your FICO score by over 50 points.
Take care.
Loan modification can affect your credit score. September 2009 onwards, lenders can report a loan modification to credit bureaus as "partial payments". Reporting loan modification as partial payments will be considered as a negative mark on your credit report. Depending upon your credit history, this can lower your FICO score by over 50 points.
Take care.
The Federal Trade Commission has released a study finding that a large number of Americans could have credit report errors. The study found 26 percent of participants had credit history errors. That means up to 40 million Americans could have errors on their reports.
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