An LA Times article makes mention of many homeowners entering the Obama Making Home Affordable Program are finding that their credit score is taking a hit. This is leaving many people wondering why their score is lowered, should they avoid the program for this reason, and how will they repair a lower credit score?
One reason homeowners, outside of those that have missed mortgage payments resulting in the need for a modification, are seeing a lower credit score from the home loan modification program is homeowners that are still paying their bills are seen as financially troubled when they request a home loan modification and the bank informs the big credit bureaus of this fact.
Homeowners that have not missed their mortgage payments see this as unfair since they are still making their mortgage payments on time and they are simply asking for a little help. While a lower credit score for participating in the modification program has many wondering if they should even seek a mortgage modification, others feel the drop in their credit score is nothing compared to the fall their score would take if they were to default on their home.
While the home loan modification program has caused many to see a lower credit score, there are those who say that repairing the decrease in a homeowner’s credit score can be corrected over time. When the modification is made and homeowners keep up with payments, they should see their credit score improve.
However, this is still a sour subject for many homeowners that had been making home loan mortgage payments, asked for some help and got a lower credit score for their troubles.