With a Loan Modification, Credit Scores May Be Affected
Many people are now facing foreclosure on their homes. They are opting for a loan modification in order save their homes and to get their mortgage payments to a level that they can afford. Many ask the question, “Will a loan modification affect my credit score?” There are basically two thoughts on this subject. The two thoughts are that yes, with a loan modification, credit scores will be affected, and the other is that no, with a loan modification, credit scores will not be not be affected. So who is correct? In essence, both schools of thought are correct and the actual answer will depend upon many factors in rewriting the mortgage.
If you are already a couple of payments behind on your mortgage, and you are applying for a home loan modification, credit reporting bureaus have probably already received notice from your lender of your late payments. Any time you have a late payment and they have reported you, your credit score will be reduced. So if you are doing a loan modification, credit scores will be affected if you are already in arrears to your lending agency.
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If, however, you are not late or behind in making your mortgage payments and you are applying for a loan modification, credit scores may not be affected. The term “may” is used here as there are circumstances where a loan modification will affect your credit rating as will be discussed.
If your lending agency decides to write a new loan, and reports your rewritten loan agreement as a new open line of credit without closing your original mortgage on your credit report, your credit score will be affected. This makes the loan modification credit reporting affect your credit score immensely as you will be showing what is considered a settlement under the terms of your original loan.
Also, any time you apply for new credit, points are removed from your credit score so it is not wise to go through many different agencies to try and get a home loan modification. Instead you should work with one trusted company who will work hard for you on getting a home loan modification such as www.SaveMeFromForeclosure.com.
Some lenders will simply change your original loan into a modified rewrite that will not be reported as a new line of credit to the credit agencies, but will be reported as it is, a loan rewrite. With this type of loan modification, credit ratings will not be harmed.. It may in fact help if you are a payment or two behind and the lender has not reported your late payments. So if you use a reputable company such as www.SaveMeFromForeclosure.com to work with your lenders on your loan modification, credit scores may not be as highly impacted.
Learn more about a loan modification, credit scores and how to stop foreclosure at www.SaveMeFromForeclosure.com