Wondering How a Foreclosure Affects your Credit History and Credit Score?
Foreclosed on your home and wondering how it affects your credit worthiness? Lets walk
through it together. How a foreclosure affects your credit history may vary based on your
specific circumstances and how you manage your credit following the foreclosure.The
foreclosure typically stays on your credit report for up to seven years from the date
filed. Initially, a foreclosure may cause your credit score to drop more than 200 points.
The exact figure will vary based on other aspects of your credit history. This drop
may make it difficult to obtain any loans or credit right after the foreclosure. However,
if you continue to pay your other accounts and debts in a timely fashion, you may not
have to wait a full seven years to successfully apply for a new mortgage or installment loan.
There are many factors for the creditor to consider during the application process. Many
mortgage companies won’t approve a new mortgage for you for at least two years following a
foreclosure, but that is not a hard and fast rule. If you have a hefty down payment and
a low debt-to-income ratio, you may be more likely to get an underwriter approval. So
what happens after seven years? After seven years, make sure to check your credit report.
The law generally requires credit reporting bureaus to remove the foreclosure from your
record after seven years. Having this removed may not have an immediate affect on your credit
score, but it will no longer play a factor in the underwriting process.