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FICO Scores and Mortgage Modification: How They’re Affected

FICO Score
  • Blog
  • Jill
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  • August 23, 2019

FICO Scores and Mortgage Modification: How They’re Affected

In determining new terms for a mortgage loan, lenders usually refer to FICO scores. But how do these scores really work with mortgage modification programs available today?

Generally, FICO scores are used in most applications for term changes and new credit contracts. Therefore, it’s important to have a good credit report for seamless approval of your loan application.

Getting the Most Out of the Mortgage Modification Process With Your FICO Score

With consumer credit report, FICO scores are easily computed using all the essential details therein. However, how a mortgage loan modification affects your FICO score will be based on your overall credit account. How your lender reports to your credit bureau can also have an impact.

If your lender reports to the bureau that you’ve defaulted on the terms of your mortgage agreement, it will decrease your FICO score. On the other hand, it might not have any effect on your scores at all.

Refinancing and Your FICO Score

If you’re looking for relief through a mortgage modification program, you need to produce a good FICO score and credit report to your lender. This will make the entire application process a bit easier. Plus, refinancing has an impact on your FICO score while trying to modify your loan terms so they can lower your monthly payments.

Loan modifications and refinancing may also have an effect on your score. One common factor is the way they are reported to credit bureaus. Whether it is reported as a new loan or an existing loan with some modifications can make a difference on your report.

If your lender makes a report as an existing loan with a few changes, there are key details included with your loan modification that have an impact on your FICO score.

These key details are your credit injury, loan balance changes, and loan term changes. However, the effect of these factors on your scores are usually minor.

On the other hand, if your lender reports it as new loan, then your FICO score may be impacted. New loan terms, new balances, and inquiries on your credit report all have an impact. In addition, you may also be affected by the new open date. All of these details are explained on the agreement you have made with your lender so review the terms carefully.

A new open date will show up as a new loan or credit obligation you need to manage. Therefore, it will affect your FICO score rather than an existing loan’s terms which are also modified through the process.

Bottom Line

Keeping your beloved home, paying off multiple loans, and dealing with monthly payments are all challenging responsibilities. With changing terms and increasing loan requirements, it’s not easy to manage the application process alone. Consider consulting an expert if you are in need of a mortgage modification.

After all, loan modifications and FICO scores work interconnectedly. They determine how much you need to repay and the benefits you will get from your loan mortgage modification program. Your lender will refer to your FICO score before they offer you new loan terms.

Restructuring your loan mortgage terms can be tricky. Many people are hiring mortgage experts and consultants to find the best option for refinancing, loan restructuring, and other similar options.

Bartifay Law Offices

If you want to improve your FICO scores and credit status to improve your chances of getting approved for a mortgage modification, Bartifay Law Offices may be able to help you. Call us today!

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