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Journal Article
How loan modifications affect credit scores
Homeowners who receive loan modifications and successfully avoid foreclosure may face another issue, one that is not well understood. It turns out that participation in loan-modification programs may adversely affect credit scores. 1 The magnitude of the impact is unclear because many factors affect what lenders will report about borrowers who seek modifications, and other factors affect how much the credit-reporting agencies, credit-score providers, and lenders will penalize borrowers who have loan modifications on their credit reports. Although both the U.S. Treasury and credit-scoring ...