HOW DOES FORECLOSURE AFFECT MY CREDIT?
If you do not make your mortgage payments and you are not provided
with any sort of payment plan by your lender, your property is
likely going to fall into
foreclosure. A foreclosure is when your lender takes possession
of your property and sells it at auction for the purpose of
recovering the unpaid mortgage balance.
In the event that the sale price the lender receives for the property
ends up being less than the amount that you owe, you will be
responsible for paying the difference, otherwise known as the
The impact of foreclosure on credit
Anyone buying a home should understand the negative impact
foreclosure is going to have on their credit. You can expect your
credit score to drop around 250 points as a result of a foreclosure.
So, if you have a credit score of 700, expect your score to drop to
450. Getting approved for any type of loan or credit will be
difficult. It is also possible that you may have difficulties
securing a new job as a result of the foreclosure. Learn more about
effects of having bad credit.
How long does a foreclosure affect my credit?
A foreclosure will stay on your credit report for seven
years...similarly to all negative items. During these seven years,
it is going to be very difficult to get approved for any type of
credit or loan. Even if you do achieve approval, interest rates are
likely going to be very high. It is important that you attempt to
rebuild your credit after you experience a foreclosure. As soon as
you begin taking the steps of
rebuilding your credit, your rating and score will begin to
improve. It will likely take between two to four years for you to be
able to get approved for a mortgage or any type of loan after
foreclosure. Learn more about rebuilding credit after
The impact of a foreclosure on your credit is significant.
Therefore, do what you can to
avoid foreclosure and request a loss
mitigation plan form your lender so that you can continue to keep
your home. Or, if you are unable to keep your home, at the very
least your credit will not be as severely impacted.
How Foreclosures Effect Your Credit Score and Life
Can a Foreclosure Be Removed From Your Credit Report?
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