Hal's Mortgage Blog

Many homeowners signed up for the government mortgage assistance program and were one of the lucky few who got a loan modification. Now their credit score has plunged over a hundred points.

 
So why is this a big deal? Try getting a car loan or debt consolidation loan with subprime credit. Even worse – many employers check credit along with a job hunter’s application. Did you know that credit card interest rates and even your homeowner’s insurance rate are score based?

 
Is this unfair? Look at it this way. Credit scores are a numeric indicator used to estimate your likelihood of defaulting on a loan. The higher the score, the less likely to default. Consumers who enter into a relief program are already financially distressed, thus more likely to default.

 
If you or someone you know is considering this option just know that there are consequences that must be carefully considered. Sometimes the pitfalls are not obvious and no one tells you about them until after the fact.