Does Forbearance Affect Your Credit Score?
Loan forbearance is an arrangement between you and your mortgage servicer to temporarily pause or decrease your monthly loan payments for a set period of time. For families going through temporary hardships, forbearance can be a helpful alternative that gives them much-needed time to regain their financial footing.
Not every homeowner qualifies for forbearance, but most lenders offer forbearance to homeowners who demonstrate a serious financial strain due to a short-term hardship, such as experiencing job loss. During the forbearance period, most loans will still accrue interest but the monthly payment amount may be reduced or temporarily paused altogether.
Before agreeing to mortgage loan forbearance, it’s important to understand the terms of your specific arrangement as well as your options and obligations for repayment. To learn more, be sure to read our post on what to do after your forbearance ends.
Loan forbearance and your credit
In addition to offering significant relief to homeowners, another positive aspect of forbearance is that it should not have any impact to your credit (though it’s always a good idea to continually monitor your credit report so you can catch any errors early).
Even if forbearance is reported to credit bureaus, as long as you oblige by your agreement, your credit score will be unaffected by choosing to seek forbearance.
This is significant because even one missed payment (being 30 days late) can be a hit to your credit. Oh the other hand, seeking forbearance can end up protecting your credit by helping prevent late payments or foreclosure – both of which would seriously affect your score.
If you’re a Florida homeowner concerned about your ability to keep up with monthly mortgage payments, forbearance may be a good agreement to seek with your lender. For legal guidance and advice prior to entering into any contract or agreement with your mortgage service, get in touch with at Jacobs Legal as a first step in protecting your consumer rights.