A business development director at an information technology company in Charlotte, North Carolina was shocked to see his credit score drop to 619 from 740 after entering the trial period for a loan adjustment under President Barack Obama’s Home Affordable Modification Program. A salary reduction had caused him to seek a change in the terms of his loan before he missed any payments. Banks, including Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., report the loan modifications to credit bureaus. The adjustments can lower credit scores because of the way the FICO formula, the most widely used by U.S. lenders, works.
By Alexis Leondis, July 20, 2009 Bloomberg
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