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Credit Bad, Loan Modification, Behind on Payments, What to Do?

By Philip Tirone

Credit Bad, No Credit Score, How to Build Credit – Question #2

Question Submitted by:  Jan, Slidell, Louisiana

I refinanced our home into a poor loan with Countrywide.  Our loan is now with Bank of America and we are two payments behind.  Our credit is bad, any solutions?

Answer:

Jan – Thank you for your reaching out, and I know how difficult it can be when your credit is bad and you feel you have no options.  It’s impossible to give you all your options with this information; however, here are a couple thoughts:

1) Your bank will not tell you this, but as long as you are paying any part of your payment, your bank will not negotiate with you on your loan modification. Myself and too many of my clients have gone through this – when you pay your bills, you don’t qualify for these programs.  The irony of that statement amazes me every time I say it.

When dealing with the banks on the loan modification, be very nice (I guess most people with credit that’s bad are not that kind) and keep asking them for a solution.  The banks are so overwhelmed that they cannot keep up with the requests they have and you won’t get their attention if you are paying.

2) There is no way around it; at the end of this process you will say, “My credit is bad.”

3) Your bank is going to tell you that you will be “unlendable” for 7 years because of credit bad. That is false.  If you understand how to build credit, you can have a 720 credit score 5-6 years before those late payments fall off your credit report.

The key is to reestablishing your credit score is to start now.  Also, don’t beat yourself up about this process, we have all had learning experiences over the past two years, and this too shall pass.

Credit Bad, No Credit Score, How to Build Credit – Question #2

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