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Does the Loan Modification always affect credit score?

energy-saver asked:

We have never been behind on our mortgage payments and the credit score is good (over 780). Our current loan (5 years fixed interest only) has just expired, and my lender bank has offered us a loan modification (same fixed rate for another 5 years). I have never asked them, they just sent me the LM offer by mail.

Is it true that if I accept this offer it will negatively affect my credit score?
Asked on: 2012-05-28 22:34:22


  1. yes so just refinance the note.

  2. George L says:

    It is important to keep in mind that a loan modification does not affect a person’s credit score as long as the modification is completed before late payments begin. This puts a vast majority of the people who could benefit the most at a disadvantage. This is because many of them are already struggling and have missed a payment or two. A loan modification involves a change in the terms and conditions a particular loan. Late payments will always negatively affect a person’s credit score. Therefore, loan modification can be a good thing, unlike a short sale or foreclosure.

  3. No it does not as long as you are not late on payments. A modification is just when the bank changes the terms of the loan. There is no credit check or hit involved. It is a voluntary act on the banks part.

  4. mikewasdin says:

    In most cases a loan modification does not effect your credit rating. Always use an attorney for ALL loan modifications that will thoroughly review your circumstances and desires before recommending a course of action. Your financial circumstances, existing loan documentation and legal rights should always be reviewed and considered. An attorney will work with you to achieve a solution which fits for you and your family. While other organizations may simply submit a loan modification request, which may be ignored by the lender, an attorney will actively and aggressively negotiate the most advantageous solution for their clients.

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