According to a recent ABC News article, some homeowners are discovering that their credit score is being impacted and even lowered due to their signing up for the Obama administration’s “Making Home Affordable” loan modification program. The concern over the decrease in the credit score is that this happens even when the homeowner is paying their mortgage on time vs. delinquent borrowers showing a decrease to their credit score after they have fallen behind on their loans.
Essentially, the request for the loan modification is reported to each of the credit bureaus. The impact is even greater for those who are not approved for the program, as this mark stays on their reports without a resolution. Those that are accepted have a notification sent to the credit bureaus acknowledging their acceptance and the modification. This does not hurt nor does it improve their credit score.