Foreclosures are a homeowner’s worst nightmare. Not only can a foreclosure impact you in the immediate, in terms of losing your home and immediate financial impact of finding a new place to live, legal expenses, etc., it can also affect you for years to come, particularly when it comes to your credit score. But while it stays on your record for several years, there are things you can do now to start repairing and improving your credit. Contact our attorneys at Moshes Law firm, so we can help you start rebuilding your credit today.
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A foreclosure is where a bank or other lending institution takes over your home or property due to something like failure to pay on your mortgage. How does a foreclosure affect your credit? Non Payments of mortgage are reported to the three major credit bureaus, Experian, Equifax, and Transunion. A credit score is a number that indicates your reliability to repay a loan or debt like a credit card. The higher the number the better you’re perceived to be able to repay your debts. Negative marks like foreclosures can bring down your credit score by dozens of points.
Foreclosures stay on your credit record for seven years. After that, the foreclosure should drop off your credit reports, though it can take upwards of ten years to recover completely from
You can have more than one credit score, and those scores can vary between the three credit bureaus. Your FICO score can give you an overall view of how your credit stands. Several factors figure in calculating your credit score:
The weight given your credit can vary too, depending on what factors a lender may consider (payment history when taking out a loan versus credit availability, for example).
Your foreclosure may negatively affect your credit score for years to come. But it doesn’t mean you can’t change and adopt more responsible financial habits moving forward. That includes taking steps to start improving your credit now. The first and most obvious is making on-time payments of any debts. There are also other steps you can take to bolster your credit score:
The first thing to do after a foreclosure is to get a copy of your credit report so you know where you stand credit-wise and can make note of any credit changes and errors moving forward. The easiest, and most above-board, way to get a copy of your report from all three bureaus (Experian, Equifax, and Transunion) is to request it from the federal government’s official credit reporting website, annualcreditreport.com. This is free, and it is the only federal-sanctioned website where you can get a credit report every twelve months. Your credit reports will show your entire credit history including lines and amounts of credit, made and missed payments, etc.
Aside from making on-time payments, there are other things you can do to avoid negative reports on your credit. The U.S. Department of Housing and Urban Development has several free resources and information to avoid foreclosures. You can also get access to a housing counselor in your area.
Another surprising source of help can be your own lender. Contact them to go over options to avoid foreclosure. Many lenders will be willing to help because of the risks, financial and otherwise, of completing a foreclosure. That’s also why it’s important to keep in touch with and not avoid your lender.
Payment history carries the greatest weight in determining your credit score. That’s why it’s important to always make sure any payments are on time. Putting your payments on auto pay and budgeting to ensure there’s enough money to cover your payments is a way of ensuring your payments are never late.
While it might not make much sense, especially if credit cards were an issue for you in the past, a secured credit card is a good way to start rebuilding credit through responsible credit use and repayment. Secure credit cards require a deposit which also serves as your credit limit. It’s also a good goal to keep your credit ratio between 10-30 percent of your total available credit.
It can be hard, if not next to impossible, to get a new mortgage with a foreclosure on your record. But there are ways you can try for a new mortgage. If you can prove you lost your home due to extenuating circumstances (i.e. an injury or illness that kept you from working and being able to pay your mortgage), you may be able to qualify sooner than the seven years the foreclosure is on your record. You may also only have to wait half the time for a loan if you’re a veteran or a first-time home buyer.
Generally, foreclosures fall off your credit record after seven years. If they don’t, there are ways to challenge and get them removed. That’s why it’s best to consult a qualified attorney who can review your options with you. Fill out the form on our website to talk to one of our foreclosure and credit repair attorneys.
If a foreclosure doesn’t come off after seven years, you can dispute it with the three major credit reporting bureaus. The easiest way to file a dispute is online:
You can also call or write the credit bureaus, but the easiest and fastest way to start the process is online.
If your lender is no longer in business, you can potentially have the foreclosure erased from your record. However, you have to do the footwork to find out if your lender is no longer operating. If it has gone under, file a dispute with the credit bureaus.
Credit reporting is not perfect. That’s why it’s important to request copies of your credit report to review for any errors or inaccurate information on the foreclosure. If there is, you can dispute it. This is best reviewed with an attorney beforehand to make sure everything is handled correctly before filing a dispute with the credit bureaus.
In addition to contacting the bureaus, you should also contact your lender about what you believe is an error about the foreclosure. Lenders and bureaus are required by law to look into your disputes. If the credit bureaus won’t make the corrections, and you’re sure you are in the right, you can next go to the Consumer Financial Protection Bureau (CFPB).
If the lender cancels the foreclosure of their own volition, you can apply to have that foreclosure removed from your credit record. This occurs most often when a homeowner offers a deed in lieu of foreclosure, meaning the homeowner signs over title to the property to the lender in exchange for release from any future financial responsibilities.
While foreclosure might seem like the end of the world, there are steps you can take to start righting your financial situation.
Our team of qualified foreclosure and credit repair attorneys at the Law Offices of Yuriy Moshes are willing to help you get back on your feet again. Call, go online to chat with, or fill out a form for a free consultation with one of our attorneys.