Phoenix Loan Modification Questions: How Does A Loan Modification Affect My Credit?

I am worried that a loan modification is going to ruin my credit. Is that true?

No, a loan modification will not affect your credit. What may affect your credit score is if you fall behind on your payments. If you complete a loan modification and never go late, your credit will not be affected. That being said, our clients that were late on their payments saw greater and faster results.

If you are debating if a loan modification is for you, ask how much your credit is worth. If it means draining your 401k and all your savings to stay current, that does not sound like it is worth it. If you end up going late on your payments and can save $75,000 over the next 5 years, is that worth a knock to your credit score? Ask it this way, would you pay $75,000 to maintain your current credit score? Because that is essentially what you are doing.

The cost of using your savings and 401k is more then financial. What happens if you need that money for an emergency? How many more years will you have to work because you use your retirement money today? The choice is up to you alone. What is your credit score worth to you? If you can keep your credit intact (by staying current) and complete a loan modification, by all means, that is a best case scenario. But, do not let your credit score force you to lose everything else. Besides, a foreclosure is much worse then 3 or 4 months of missed payments.