Jasmine Bendon of Ventura says her FICO scores dropped from the mid-700s to the low-600s after her lender put her on a trial modification and reported it as a partial payment. On the plus side, the trial modification has cut her monthly payment by $1,300.
New reporting plan
Starting today, lenders have a new, more benign way to report government-sponsored loan modifications.
Under guidelines put out by the Consumer Data Industry Association, lenders should report them as a “loan modified under a federal government plan,” says Norm Magnuson, a spokesman for the association, which represents credit bureaus.
FICO – the leading provider of credit scores – will ignore this new notation for the time being. It will neither help nor hurt a person’s credit score until FICO decides how to treat it.
Sure it won’t. Not even FICO really knows how the FICO score works.