Simply having a foreclosure on one's credit report will not decrease the score to the point where it is impossible to get any other loans. However, the entire foreclosure process often has many more negative marks than just the actual legal process and charge-off of the loan.
As soon as homeowners begin missing mortgage payments, their credit score will begin to drop quickly. Having one or two missed payments over years, though, does not impact their loan history as much as when they experience a hardship and start stringing together 30-, 60-, or 90-day periods where they are late.
Once borrowers do fall behind by more than a month or two, though, their ability to take out any new loans will disappear, as potential lenders will be aware that there is a current financial crisis and little chance of being repaid. This is, of course, one of the main reasons homeowners should try and take care of a potential foreclosure even before they have missed their first payment.
But in terms of the credit score, even having several late mortgage payments may not drag it down as far as possible. The credit reporting agencies base their scoring system around the total picture of the borrower's payment and credit situation, meaning that the more debts the homeowners can keep up payments on, the higher they will keep their score.
Also, if homeowners have numerous credit cards, car loans, student loans, and other bills and have kept on time with all of them, they may be able to retain a good score (although probably not an excellent one). The real risk to the credit report comes when payments are late on numerous debts at once, as may happen during a real economic hardship.
Even borrowers with a near perfect credit score above 750 (out of 800 total) can experience a drop into the low 600s just by missing mortgage payments for consecutive months and going into foreclosure. Combine that with numerous other late payments or collection accounts, and the score can drop into the middle or high 400s.
The important thing to remember is that simply having a foreclosure is not that significant an event to destroy a credit score all on its own. But for owners who are defaulting on other debts at the same time as facing foreclosure, it may take years of recovery to regain even a good credit rating.
A foreclosure will typically remain on your credit report for seven years.
The foreclosure will be on your credit report indefinitely.
Deed in lieu of foreclosure is not nearly as devastating to your credit as is a full foreclosure. Below is an article about the pros and cons of deed in lieu.
A foreclosure will typically remain on your credit report for seven years.
how many points dose foreclosure decrease your credit score
Usually a foreclosure will lower a person's credit score by 250 points, and sometimes by as many as 280 points. The foreclosure stays on a person's credit report for seven years.
You will not lose your general contractor license or your real estate license if you have foreclosure on your credit report. A foreclosure or bad credit is not a disqualification for these types of licenses.
A foreclosure can stay on your credit report for over ten years. It will have a significant and negative impact on your score.
you must restore your credit.
Foreclosure and FICO The total impact of a foreclosure on ones credit report is estimated to be between 200-300 points. The foreclosure itself accounts for 125 -175 points and the late payments that led up to the foreclosure account for the remaining point deductions. Ironically, the higher your score was to start with the more points will generally be deducted. After several years (2-3) your credit score will have rebounded substantially as long as other payments are maintained. You can expect anywhere from a 50-100 points penalty remaining on the report at this point.
A foreclosure will be expunged from a person's credit report after seven years have expired from the time the foreclosure was reported. Valid information on a credit report cannot be removed until the required time limit for reportage has expired.
Any foreclosure or bankruptcy affects your credit. And for anywhere from 7 -10 years.