A foreclosure stays on your credit report for seven years, starting on the date your first missed payment (in the series that ultimately leads to the foreclosure) is reported to the credit bureaus. After the seven years have passed, the record of the foreclosure will be removed from your credit report automatically. If a foreclosure is still on your credit report after seven years, you should file a dispute with the credit bureau that produced your report.
The impact of a foreclosure on your credit score will vary based on your credit profile, but you can generally expect a drop of at least 100 points. This point drop is largely due to the records of missed payments added to your credit report in the lead-up to the foreclosure, which can cause your score to drop by 20 to 80+ points, depending on the shape of your credit beforehand. You can see exactly how much a foreclosure will affect your credit score by using our free credit score simulator.
As far as recovery is concerned, you might not see a complete return to your credit score from before foreclosure for a few years. Don't let that stop you, though. There are plenty of ways to start rebuilding your credit while you wait. Some of the best ways to rebuild your credit after foreclosure include paying your bills on time, using a secured credit card responsibly, and keeping your credit utilization below 30%.
A foreclosure can remain on your credit report for 7 years. However, some of the negative effects may diminish over the years. If you can keep other debt obligations in good status (keep paying your bills, credit card debts, etc.), your score can improve and rebound much earlier.
I am sorry to hear that you are going through a foreclosure. There's no question that losing a home is a financial earthquake. Whatever the short term effect on your credit, in the long run you can take comfort that you can eventually recover.
A foreclosure will be reflected on your credit report for seven years. Initially this has quite a negative affect on your credit, and makes it unlikely that you would qualify for a new mortgage or other types of credit during the first few years following a foreclosure. However, the i… read full answermpact of the foreclosure on your FICO score (used to evaluate a borrower's suitability for a mortgage) lessens over time. If it is an isolated event and not part of a larger pattern of credit problems, the impact will generally begin to lessen after about two years.
To recover from a foreclosure, the most important thing is to avoid any negative credit events in the future. Pay your bills on time, keep low or no balances on your credit cards, work to clean up mistakes and past negative items on your credit report and avoid taking out new sources of credit.
It's also important to understand why you went into foreclosure? If your foreclosure was caused by the cascading effects of job loss, illness or natural disaster, how can you build up a stronger emergency fund and safety net of insurance protection for your home or your income? If overspending or poor cash management led to overall problems with credit and bills, you may want to consider tackling those before your buy a home again. You can learn more about paying down debt in our new book What Your Financial Advisor Isn’t Telling You.
I'm sorry you are in a situation to have to ask this question. A number of years ago my wife and I relocated out of state for a new job, and the house we left behind did not sell for 5 years. Renters were in the house for more than 3 years, but their default on the lease was very expensive. Very early on we racked up $20,000 in credit card debt trying to keep up with everything. The house eventually sold, and our finances recovered nicely. The upside was our credit score was great throughout the entire time. But the score and great credit came at a significant price. So I would ask you the question, what is a good credit score and good credit worth to you? Knowing what I know now, I'm not sure I would have held onto the house so tightly. Then again, foreclosure isn't fun. It's worth having your situation looked at by a professional to get an idea of your options before going down a road you can't go back.… read full answer
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by a WalletHub user. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.