Modified loan on home can hurt

The last thing many troubled homeowners want to hear is that they could be denied a car loan after they get a chance to modify their home loan. But credit scores can get dinged after a home loan modification, making it more costly or tougher to get a loan or credit card. Hundreds of thousands of homeowners find themselves in a financial squeeze, thanks to the recession and the meltdown in the housing market. Lenders have offered trial loan modifications to more than 700,000 eligible borrowers. As of late November, about 31,000 trial loans have been made permanent, which requires at least three on-time payments under the trial program and proof of income. What these troubled homeowners don’t realize is that these attempts to avoid foreclosure may result in their credit scores taking a hit. A potentially damaged credit score is one of those hidden costs of home loan modification – and it varies significantly depending on your lender, as well as when you received your loan modification, your credit history and how your loan was altered.

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