Posted on January 13, 2009 - by admin
How much would a foreclosure affect a credit score?
)BJB(
How much would the foreclosure of a $150,000 mortgage affect a credit score, and for how long? Let’s say the mortgage is about a quarter paid off, and the credit score is relatively good (~650).
7-10 years?
That sounds more like a bankruptcy.
Please note: this is purely theoretical. I am not going through a foreclosure, and I likely won’t, so please don’t sympathize with me. I, however, sympathize with you; it must be incredibly tough to go through one.
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How much would the foreclosure of a $150,000 mortgage affect a credit score, and for how long? Let’s say the mortgage is about a quarter paid off, and the credit score is relatively good (~650).
7-10 years?
That sounds more like a bankruptcy.
Please note: this is purely theoretical. I am not going through a foreclosure, and I likely won’t, so please don’t sympathize with me. I, however, sympathize with you; it must be incredibly tough to go through one.
Add your property for free
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January 16, 2009
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A foreclosure is a huge credit no-no so basically your credit would be shot for the next 7-10 years. It happens but the sooner you can get that ‘baddie’ to shrink away by being gainfully employed and keeping your existing accounts current your credit score should improve within 1.5 to 2 years.
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January 19, 2009
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Foreclosure, bankruptcy and repossessions all affect credit scores about the same, between 100-150 points as soon as they hit your report.
They will show for 7-years but you can re-establish your credit score in the first 24-months if you work at it.
Credit scores are 90% based on the last 24-months of history so if you pay everything else as agreed for the next 2-years your score will jump back up, the foreclosure will still show but you will have re-established your score.
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January 20, 2009
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A foreclosure will affect your credit about 100 points.
However, please keep in mind that when lenders pull your credit for personal loans, vehicle loans, and mortgage loans, they recieve a full detailed report, NOT just the FICO (like a pull for a dept store credit card). Your financial risk to a lender is based on your past three years of credit history.
The foreclosure will stay on your credit report for 7 years. (Since you mentioned bankrupcy, that’s a bit worse. Those stay for 10 years). After 7 years the foreclosure will vanish and you’ll be able to truly start fresh. Getting a mortgage loan in the future is going to be challenging as long as that foreclosure is on your report, I can’t lie to you. The further in the past it occured, the better off you are.
How much has been paid on the mortgage is unfortunately irrelevant to your score. It does effect how much you may end up owing the lender, however.
The lender will list you home for the amount owed. If, for some reason, they cannot sell the home for the amount owed and are forced to sell it for less they WILL sue you for the balance owed.
Your best bet is to do whatever is necessary to keep from defaulting on this loan. Due to the fact that you have it a quarter paid off, you may qualify for refinancing. This could take your monthly payments down a good bit, depending on your current interest rate and if you are under an ARM. You could also attempt a short sale (selling the home for the amount you owe on it and walking away empty handed). There are all sorts of options out there to avoid foreclosure, take advantage of them and best of luck.
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January 22, 2009
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I am in the middle of foreclosure I can tell you that my own credit score has tanked by about 200 points. I also had pretty good credit when this whole thing started.
It doesn’t matter how much of the mortgage is currently paid off, a foreclosure is a foreclosure.
It will stay on your credit report for 7 years.
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January 24, 2009
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Just like bankruptcy, a bank foreclosure stays on your credit report for at least seven years, and it’ll send your credit score plummeting into the least desirable interest-rate brackets. Unlike bankruptcy, though, a foreclosure won’t erase your other debts.
If foreclosure becomes a possibility, try to refinance your mortgage. Lending institutions prefer receiving steady monthly income to owning homes themselves, particularly in a weak real estate market, so they have an incentive to refinance.
Unfortunately, your credit score doesn’t simply freeze in place when you go into foreclosure. Your credit history continues to grow according to the types and amount of revolving debt (credit cards and utility bills) and installment accounts (mortgages, car loans, etc.) you have.
As a result, with every new payment you make or fail to make on these lines of credit, your credit score also continues to change.
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January 27, 2009
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Average credit score in the US is 720. A foreclosure drops the score to 619..