According to FICO, for borrowers with a good credit score, a foreclosure can drop your score by 100 points or more. If your credit score is excellent, a foreclosure could reduce your score by as much as 160 points. Typically, it will take three years or more of on-time payments to restore the credit score.
How does a foreclosure show on your credit report?
A foreclosure entry typically appears on your credit report within a month or two after the lender initiates foreclosure proceedings. The entry remains on your credit report for seven years from the date of the first missed payment that led to the foreclosure. After that, it is deleted from your report.
In general, though, you can expect a foreclosure to drop your score by 100 or more points, according to a 2011 report from FICO, a credit scoring agency. It can take up to seven to 10 years for your score to recover entirely, FICO also found.
How does a foreclosure affect your credit rating?
Late mortgage payments, short sales and deeds in lieu also make a negative impact. If you’re experiencing hard economic times and are faced with the reality of one of these options, take heart: The damage is not permanent. With time and patience, you can rebuild your credit rating.
When does a foreclosure clear your credit report?
The good news is that foreclosures will clear your credit report after seven years, and that if it was an isolated incident — you didn’t also default on a bunch of other payments — it won’t have as large of an impact on your credit score.
What happens to a seller’s FICO score after foreclosure?
Sellers will take a hit of 200 to 300 points, depending on the overall condition of credit. This means if a seller’s FICO score before the foreclosure was 680, it could dip as low as 380.
How does a deed in lieu of foreclosure affect your credit?
Foreclosure or Deed-in-Lieu of Foreclosure: Both of these solutions affect credit the same, says David Steep of Vitek Mortgage. Sellers will take a hit of 200 to 300 points, depending on the overall condition of credit. This means if a seller’s FICO score before the foreclosure was 680, it could dip as low as 380.
