topic Re: Do HARDSHIP PROGRAMS affect your credit score? in General Credit Topics

Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Thu, 11 Dec 2008 15:33:35 GMT

I was recently laid off from my job. I got a good sev package but I still contacted my 4 CC companies and explained to them that I was laid off. I asked them if they could help in anyway. I made sure to explain that I was being proactive and didn't want to fall behind on my payments.

They all gave me good programs. No interetest for a few months. I can't use the cards, but I don't want anyway since I'm cleaning my credit up before my wife sh*ts a brick.

MY QUESTION: Do hardship programs hurt your credit score? I have a 624 and I'm trying to get it up to a reasonable number.

Message Edited by appstate on 12-11-2008 07:33 AM

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Thu, 11 Dec 2008 15:19:03 GMT

Well it seems like they are keeping your accounts open with no interest rate if you dont use the cards.. therefore I dont see any reason for your score to hurt. Unless you were on a DMP, that might be a different story.

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Thu, 11 Dec 2008 15:24:38 GMT

DMP? What's that?

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Thu, 11 Dec 2008 15:33:12 GMT

Next time I will look at the common abbrev thread!

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Thu, 11 Dec 2008 15:56:24 GMT

DMP is a debt managent program offered by a credit counseling company. Another suicidal impact to the credit is the debt settlement program.

Re: Do HARDSHIP PROGRAMS affect your credit score?

marty56 — Fri, 12 Dec 2008 12:22:07 GMT

Being in a DMP does not avdersely affect your credit like Debt Settlemnt does since any loss in points due to account closing will be made back up as the balances of your CCCs are paid down. Once you are finish the DMP program, you are able to get new credit as long as your credit scores are in the required range.

If you can afford to, I would continue to pay the CCCs as before and not use the hardship program just because you can.

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Fri, 12 Dec 2008 17:58:59 GMT

OMG! I just found out that my score went down 55pt!

Citicards reported this:

Arrangements made with credit grantor to make partial payments
Credit card

I asked them when I signed up for this if it would affect my credit score. They said no. I had two credit cards with them. I just paid one of them off and have a zero balance. I owe $4300 on this one.

What can I do?!??!?!?!

I have a 569 score!!!!

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Fri, 12 Dec 2008 23:34:25 GMT

^^bump

Re: Do HARDSHIP PROGRAMS affect your credit score?

marty56 — Sat, 13 Dec 2008 00:10:14 GMT

TL's dont effect you FICO score. I will assume you got a 30 day late over this. I would call them and pay the mimimum due and ask if they could remove the late.

As a note to those who think otherwise, my 120 day late on my CR was the result of paying too little on the monthly payment to BofA.

Dont trust anything a CSR says unless you get it in writting.

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Sat, 13 Dec 2008 00:16:47 GMT

I've not been late on a payment for a long time.

Re: Do HARDSHIP PROGRAMS affect your credit score?

marty56 — Sat, 13 Dec 2008 00:25:38 GMT

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

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Sat, 13 Dec 2008 02:01:43 GMT

See below...

Re: Do HARDSHIP PROGRAMS affect your credit score?

kbella — Sat, 13 Dec 2008 02:39:00 GMT

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.

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Mon, 15 Dec 2008 16:05:13 GMT

But for a score to drop 55 pts is crazy.

Re: Do HARDSHIP PROGRAMS affect your credit score?

CreditAble — Mon, 15 Dec 2008 22:15:27 GMT

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

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

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Tue, 16 Dec 2008 15:12:27 GMT

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.

Re: Do HARDSHIP PROGRAMS affect your credit score?

BBYGRL — Tue, 16 Dec 2008 22:43:40 GMT

@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?

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.

Re: Do HARDSHIP PROGRAMS affect your credit score?

marty56 — Wed, 17 Dec 2008 11:44:27 GMT

@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.

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.

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Wed, 17 Dec 2008 15:31:44 GMT

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!!!!

Re: Do HARDSHIP PROGRAMS affect your credit score?

Anonymous — Wed, 17 Dec 2008 22:25:18 GMT

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.