Soylent Green Is People_IHB
New member
I send out a weekly email to my agents that is a cull of better news stories. I saw this but did not see it elsewhere: From a WSJ article.
Question: Why would something endorsed by the government trash my credit score?
Many lenders and those in the credit-reporting industry have struggled to keep up with the dramatic housing remedies that Washington has devised. Shortly after the government rolled out its modification program earlier this year, the Consumer Data Industry Association, which represents credit bureaus, advised lenders to classify such modifications as a "partial payment," a preexisting code that generally hurts your score. Under the widely used FICO model, for example, "partial payment plans" are considered comparable to a missed payment or some other type of derogatory or collection item on their file, says Tom Quinn, vice president of global scoring solutions at FICO.
But there's a temporary fix on the horizon. <strong>Starting in November, lenders will be able to use a new code that specifies whether a mortgage was modified under the government's plan. That code will reduce the hit to the credit files of people who work with the government to modify their loan; those who work directly with their own lender for more lenient terms could still see a significant hit if the lender reports their own modifications as a partial payment to the credit bureaus</strong> But while the new November status codes will have no impact on your score for now, that could change once the industry has had a chance to determine whether someone who modifies a loan is an elevated credit risk, says John Ulzheimer of Credit.com.
So... if you mod using the Governments plan your score won't be hit hard and you can go out sooner and re-debt yourself! From a trusted source: "So much for accuracy in credit scores"
My .02c
Soylent Green Is People.
Question: Why would something endorsed by the government trash my credit score?
Many lenders and those in the credit-reporting industry have struggled to keep up with the dramatic housing remedies that Washington has devised. Shortly after the government rolled out its modification program earlier this year, the Consumer Data Industry Association, which represents credit bureaus, advised lenders to classify such modifications as a "partial payment," a preexisting code that generally hurts your score. Under the widely used FICO model, for example, "partial payment plans" are considered comparable to a missed payment or some other type of derogatory or collection item on their file, says Tom Quinn, vice president of global scoring solutions at FICO.
But there's a temporary fix on the horizon. <strong>Starting in November, lenders will be able to use a new code that specifies whether a mortgage was modified under the government's plan. That code will reduce the hit to the credit files of people who work with the government to modify their loan; those who work directly with their own lender for more lenient terms could still see a significant hit if the lender reports their own modifications as a partial payment to the credit bureaus</strong> But while the new November status codes will have no impact on your score for now, that could change once the industry has had a chance to determine whether someone who modifies a loan is an elevated credit risk, says John Ulzheimer of Credit.com.
So... if you mod using the Governments plan your score won't be hit hard and you can go out sooner and re-debt yourself! From a trusted source: "So much for accuracy in credit scores"
My .02c
Soylent Green Is People.