How will a loan modification affect my credit score?
How will a loan modification affect my credit score ?
It comes back to how is the account being paid when the modification is completed. If the account is currently past due and a principal reduction is made. Then the reduction will not substantially help or hurt the score. What will hurt the score is the history of slow payments (if any) that preceded that reduction. Once the loan modification is made and the borrower is making on-time payments (on this and hopefully all other accounts)
If a year or two go by than the borrower’s credit score should recover. Although, the bad history on the account will always hurt an individual’s score to a degree. Once an account falls into a “Was 30 / Was 60 / Was 90” it will always be tainted with that classification. (Was 30 / Was 60 / Was 90 is an insider term that indicates the account was delinquent but is now current)