Loan modification has helped several people prevent the home foreclosure - this is the best available solution to all who do not want to lose their home.So if you plan to get these loan modifications,you might wonder if it would affect the credit score or not.The answer to this FAQ depend on your situation.Let me explain about this in detail here.

Answer the following questions to know if the modifications will affect your credit or not:

=>Did you miss any payments to the lender before?

=>have you made the payments promptly to the lender till now?

If you say yes to the first question then the credit might be affected.Since the lender modifies the loans,you will be be forgiven a part of the money,you owe to the lender.Thus this will be reported as the “paid for less than owed” in the credit.This is not a better credit rating.When you are deciding on a proper agreement with the banks,it is also much more sensible to to ask them to update the loan as "current".There is no harm in asking the lenders to do this favor for you.

Getting these modification agreements is not only the best way to avoid the home foreclosur but you can also use this to improve the credit report.After making the prompt payments for a number of months,you will find the credit score improving.This is a much needed improvement.If you are confused about - "does loan modification affect credit score",it is much better to call the lender or meet him directly and ask every doubt you have.