A great question! It depends on how the lender reports it. If it is reported as a partial payment, rather than paid as agreed, it will have a negative effect on your FICO score - as much as 100 points.
But wait - as of Nov 1, 2009, new guidelines set by the Data Industry Association are instructing credit bureaus to ignore loan modifications as long as the lender has noted, "a loan modified under a federal government plan." Of course it still will be on the report and as far as how long it should not impact your score, who knows.
What to do if you are modifying:
- Make sure your modification is a government sponsored program (in some cases you may not qualify though)
- As the lender up front how they will report it on the credit report.
More questions? email me.
Tracy Pina
Wednesday, January 27, 2010
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