@EaglesFan2006 wrote:I'm exploring the possibility of hardship assistance for a personal loan. According to the plan I read it looks the terms remain the same but payments can be deferred for a couple of months. But they said they note in the credit reporting that the loan is in forbearance or "modified".
what impact does such a note have? I'm not worried about anything short term. But once I get back on track and pay it off in the next 1-2 years I would like to be able to think about buying a new home. Does the note go away once I resume repayment? If not what impact would then note have on FICO, particularly mortgage scores, 1-3 years from now.
I would assume that there will be some negative impact. So if you don't want that, stay away from asking them for mercy. Lenders have no mercy.
Probably will be noted on your reports. Lenders will report a loan modification to the credit bureaus as a type of settlement or adjustment to the terms of the loan. If it shows up as not fulfilling the original terms of your loan. That can have a negative effect on your credit. Although the effect will be less and of shorter duration than a string of missed payments. Not sure. But. I believe I've read that once caught up and the modified short term agreement has been statisfied. They may remove the comment. Not like paying off a settled account to $0 at a lesser amount. Others can verify who been thru this situation.
Excellent. Yes they can remove comments. Depending on lender. Some dont. Glad it worked out. Hope it works OK and you get caught up and say later "comment". Then list as pays as agreed. 50/50. Good luck!
@EaglesFan2006 wrote:
@FireMedic1 wrote:Probably will be noted on your reports. Lenders will report a loan modification to the credit bureaus as a type of settlement or adjustment to the terms of the loan. If it shows up as not fulfilling the original terms of your loan. That can have a negative effect on your credit. Although the effect will be less and of shorter duration than a string of missed payments. Not sure. But. I believe I've read that once caught up and the modified short term agreement has been statisfied. They may remove the comment. Not like paying off a settled account to $0 at a lesser amount. Others can verify who been thru this situation.
Thanks...below is the exact wording from the email from Upstart:
In regards to what potential negative impacts entering hardship can have, the main one would be credit reporting. If/when you enter a hardship plan, we begin reporting to the credit bureau's that your loan is either in forbearance or modified. All the normal information is still reported, this is just an extra note added to the report. I cannot comment on how this can effect your credit, and would recommend contacting the credit bureau's if thats a concern.
So it looks like it would just be a note. while the montly payment would change, it would also be extending...I'm ultimately paying the full balance with additional interest. Again, I'm not so worried about getting new credit any time soon. Once I get this squared away and everything else stable I would like to be able to move and want to make sure whatever consequences won't hurt my credit. Realistically it will be at least 6 months after this is fully paid off before I do anything in terms of a new mortgage
It's not just a comment. It's a negative that will stay with you for years to come. Probably 7 years. And it will affect your scores.
And no, the credit bureau will not be able to tell you how it will affect your scores.
But I'm telling you it will hurt your scores.
@EaglesFan2006 wrote:
@SouthJamaica wrote:
@EaglesFan2006 wrote:
@FireMedic1 wrote:Probably will be noted on your reports. Lenders will report a loan modification to the credit bureaus as a type of settlement or adjustment to the terms of the loan. If it shows up as not fulfilling the original terms of your loan. That can have a negative effect on your credit. Although the effect will be less and of shorter duration than a string of missed payments. Not sure. But. I believe I've read that once caught up and the modified short term agreement has been statisfied. They may remove the comment. Not like paying off a settled account to $0 at a lesser amount. Others can verify who been thru this situation.
Thanks...below is the exact wording from the email from Upstart:
In regards to what potential negative impacts entering hardship can have, the main one would be credit reporting. If/when you enter a hardship plan, we begin reporting to the credit bureau's that your loan is either in forbearance or modified. All the normal information is still reported, this is just an extra note added to the report. I cannot comment on how this can effect your credit, and would recommend contacting the credit bureau's if thats a concern.
So it looks like it would just be a note. while the montly payment would change, it would also be extending...I'm ultimately paying the full balance with additional interest. Again, I'm not so worried about getting new credit any time soon. Once I get this squared away and everything else stable I would like to be able to move and want to make sure whatever consequences won't hurt my credit. Realistically it will be at least 6 months after this is fully paid off before I do anything in terms of a new mortgage
It's not just a comment. It's a negative that will stay with you for years to come. Probably 7 years. And it will affect your scores.
And no, the credit bureau will not be able to tell you how it will affect your scores.
But I'm telling you it will hurt your scores.
Thanks. I can live with a short-term dip since applying for any new credit isn't on my radar right now. I'm more concerned with down the road when this is paid off and I might want to pursue a new mortgage. I would hope the negative impact diminishes a bit over time?
I'm sure that over the years its negative impact diminishes, as with all FICO negatives.
@EaglesFan2006 wrote:I'm exploring the possibility of hardship assistance for a personal loan. According to the plan I read it looks the terms remain the same but payments can be deferred for a couple of months. But they said they note in the credit reporting that the loan is in forbearance or "modified".
what impact does such a note have? I'm not worried about anything short term. But once I get back on track and pay it off in the next 1-2 years I would like to be able to think about buying a new home. Does the note go away once I resume repayment? If not what impact would then note have on FICO, particularly mortgage scores, 1-3 years from now.
@EaglesFan2006 Here's an example of loan modification having long term effect:
