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Loan Modification Lowers Credit Score

December 28, 2007

in Community Blog

loan modification lowers credit score
Credit Report – trying to improve – score question?

I was 4 months behind on my mortgage however I just went through a loan modification with Citimortgage and lowered my interest rate from 6.5% to 5%. The 4 months were rolled into the back of my loan and I stay current on my loan. I also was 2 months behind on my automobile loan and now I’m current. I’m concerned about my credit score as it is ver low, 472. I still have credit cards and student loans to pay on. I’m most concerned with my credit score, since I’m current on the house and automobile will I start seeing points go up. I’m now up to date and definitely don’t on plan to get behind on my payments ever again as that was a miserable time. Serious answers only please.

You have to rebuild your credit by making all your payments on time. You will need at least 24 months of consistent, on time payment history to see any improvement in your score.

Frankly, since you’ve just started getting back on your feet, you really can’t afford to take on any more debt. So your score really isn’t that important.

The one thing that you can do to give your score a boost is to pay off your credit card balances. Carrying balances on your credit cards of more than 30%, hurts your score. Pay off the balance and your score bounces back. Working on paying off the credit cards would be the smart thing to do anyway. Save all that interest.

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