Know How a Loan Modification Could Cause a Credit Score Crash

 

An introduction was made in the area of loan modification during the administration of president Obama. This initiative has been addressing the problems of homeowners who have always been making their loan payments on time but were close to default. All those participating in this scheme have a chance of getting their credit score reduced by up to 100 full points. However, you need to know that such a drastic reduction could create difficulty if the homeowner gets employed and also could inhibit their chances of getting another loan. This dive in credit score usually comes as a surprise for those under this program. At the beginning there is no indication of a change because they are in a three-month trial period. But after they enter and pass this period, the loan modification company alerts the three major credit bureaus and that is when the effect is truly seen.

The industry defends this practice

It should not be fair to get shot down when you ask for help, but the credit rating industry thinks it is fair. For borrowers who break the law and fall behind on their payments, it is no argument that their credit score should plummet and even crash. But a legitimate homeowner asking for loan modification help because they want to be safe does not deserve such harsh judgment, since they are still making up their payments regardless of the hard times. The industry, however, defends this practice by saying asking for help only points to acute financial problems.

Avoid credit

Due to this absurd system, the best bet is simply to steer clear of credit in total. Do not collect or depend on credit for your wants but only for things you really need. A loan modification firm can assist with your troubles if you have any, but it is best to avoid such troubles from the onset by avoiding credit whenever possible.

A good option for legal representation is loanmoddepot.com