Keeping a credit score strong when dealing with mortgage problems

The economic downturn caused many homeowners to struggle making their monthly mortgage payments. The housing situation has yet to improve: Home values remain low and poor credit consumers continue to have problems trying to refinance their existing mortgages.

Some homeowners may be in such dire financial straits that they may be left with only two options – a short sale or foreclosure. Joanne Gaskin, FICO scores director, recently told the Baltimore Sun that a number of individuals think one missed mortgage payment won't damage their scores, but this isn't the case.

According to a recent FICO study, individuals with scores around 680 ended up losing between 60 and 80 points whether they were 30 days or 90 days late on payment.

Because credit scores are important in securing a refinance, it's important to protect credit scores from credit reporting errors or unfair reporting practices.

If a credit company cannot verify that its credit reporting process was both fair and accurate, then a consumer may have reason to investigate and dispute a questionable mark on his or her file. Credit repair companies may help with disputes because many have the experience to hold lenders accountable for reporting in compliance with federal guidelines.