Do HARDSHIP PROGRAMS affect your credit score?

[marty56]

If they didnt mark you as late, I dont see why you lost points.  Are you sure the didnt send they account into collections?

[appstate]

See below...

 

[kbella]

FWIW, I have been on a DMP for almost a year, and my stores have slooowly been going up.  So if you pay the DMP on time and continue to pay other creditors, it shouldn't impact a score all that much. 

[appstate]

But for a score to drop 55 pts is crazy. 

[CreditAble]

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@appstate wrote:
But for a score to drop 55 pts is crazy. 

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  The whole purpose of credit scoring is to reflect credit worthiness. You had an existing obligation to a creditor to pay a certain amount by a certain date. You contacted that creditor and claimed that you couldn't meet the terms of your agreement due to a hardship. The creditor agreed to modify your obligation, and reported the fact that you couldn't keep up with your payments to the credit bureaus.

 Not being able to meet payments on time is exactly the information that your other creditors want to know about. That is one of the main reasons that creditors routinely check your credit reports. They want to know if you are not meeting your payment obligations to other creditors. It would therefore follow that Fico scores will be affected when you claim a hardship.

 I personally would never tell a creditor that I am having financial trouble unless I can't possibly stay current any other way. Once one spills the beans, that creditor has the account flagged and will be doing everything to limit that company's risk exposure. Adverse action could very likely follow any "heads up" given to the creditor..

 One thing that I am absolutely sure of. If I lent you money and you told me that you are having financial trouble. I would not benefit by you going deeper in debt by borrowing more form others. There would be more creditors chasing your limited resources and I would not have as good a chance of getting paid in full. 

 That is why your creditor threw you under the bus and you lost the 55 points. Now that the genie is out of the bottle you might be in for some more trouble with AA from other creditors. The other card companies did know of your plight and are working with you. The score drop might cause a domino effect howevr.

 How does a lower interest rate help you? Does it substantially reduce your monthly payments? You do realize that the banks can raise your interest rate in a few months to a higher rate than it was before?

 In these hard credit times, creditors might be willing to "work with" delinquent consumers if they think the consumer might otherwise stop paying altogether.

 Unfortunately once a consumer asks a creditor for help it puts the creditor in a position of trying to collect as much as possible before the consumer might stop paying altogether. In my opinion you put your creditor in "collection department mode" as soon as you called.

 The bank lowered the interest rate temporarily. What happens next depends upon what you do. You can be rate jacked anytime now if the bank doesn't like your future performance, starting with your next month's payment.

 Sorry to hear of your plight. I hope you can find work as fast as possible. 

Message Edited by CreditAble on 12-15-2008 05:15 PM

[appstate]

CreditAble,

Thanks so much for that explaination.  I called the CCC and spoke with a CSR and explained to him that I was told by a previous CSR that this would not affect my FICO. He said they don't know about credit ratings.  Go figure.

I waited to hold to speak with his manager but they were unavailable to speak with me and promised to call me back.

I told him my main issue is to fix my credit.  I told him I would drop the program if it would fix this.  I will keep you posted.

[BBYGRL]

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@marty56 wrote:
If they didn't mark you as late, I don't see why you lost points.  Are you sure the didn't send they account into collections?

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 Hey Marty,

I'm curious to know if the CL is reported when you enter a DMP or make payment arrangements with the CCC? Do they stop reporting the CL when you can no longer use the card since it may be considered closed for the time being? I would think you would lose points if you lose that benefit.

[marty56]

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@BBYGRL wrote:

 Hey Marty,

I'm curious to know if the CL is reported when you enter a DMP or make payment arrangements with the CCC? Do they stop reporting the CL when you can no longer use the card since it may be considered closed for the time being? I would think you would lose points if you lose that benefit.

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The CL is reported and all of my accounts were closed except for my infamous BofA account which is still listed as open (I think its BofA's mistake since they still say its open when I check it with them).

The only information about the accounts related to DMP on my CR is that the account was closed by the CCC and the account is managed by a CCCS.

I do not know what my credit scors where when I entered DMP.  My best guess was in the high 500's/low 600's.  Sinhce most of my CCCs where max-out anyway, I doubt that my scores where affected by the closing but  dominated by util.

[appstate]

UPDATE:

I just spoke with a CSM and she said that the CSR was wrong in telling me that hardship programs do not affect my CS. My interest rate was at 28% she said she could get it to 18% but she first wanted to see if she could get it to the intro 0% rate.  She said she is going to call me back with an answer.

Regardless, she gave me the fax number to dispute it.

Nice lady.. hopefully she can get me the lowest rate possible!!!!

[appstate]

The CSM called me back.  She reduced my rate from 28% to 11%.  She told me to dispute the info and gave me the fax number.