The Impact of Foreclosure on Your Credit
The impact of foreclosure on
your credit can mar your credit
report for seven years from the date of your first missed payment. According
News, “During that time, it can affect your credit score and the way other
lenders view your creditworthiness in the future.”
The Impact of Foreclosure on Your Credit
Samurai tells us, “if your FICO credit score is
680, a foreclosure will drop your credit score on average
by 85 to 105 points. If your credit score is excellent at 780, a
foreclosure will drop your score by 140 to 160 points. In other
words, the higher your credit score, the more it will get smashed!.
What are FICO credit scores?
Mayer, a consumer blogger, says, “It’s an
algorithm designed to predict your likelihood of repaying debt. Lenders use
your score to determine whether to approve you for loans and credit cards and
at what interest rates. Insurers use credit scores to set premium rates, and
employers use them when making hiring decisions.
scores run from 300, considered the highest risk of default, to 850, the lowest
risk. Though FHA for years has accepted applicants who have FICO scores in the
500s, the practical reality has been that most lenders ignore borrowers whose
scores are under 620 or even 640.
How are FICO credit scores
calculated? Your score is based on many different pieces of credit data in your
credit report. This data is grouped into five categories, as outlined below.
The percentages in the chart (above) reflect how important each of the
categories is in determining how your FICO Scores are calculated.
If you don’t know your FICO
credit score, you can request
a free copy of your credit report then check it for errors, such as late
payments incorrectly listed for any of your accounts and that the amounts owed
for each of your open accounts are correct. If you find errors in any of your
reports, dispute them with the credit bureau.
Are Steps You Can Take to Avoid Foreclosure.
and level with them. They have seen this
before and will demand you take steps to fix it. Steps to take may require you
selling your toys and making significant cuts in your spending.
not ignore your mail
. Many have been in your shoes. The first thing
many did when the mail came was throw the bills in a drawer. Those first
envelopes will contain helpful suggestions to get your finances under control.
Then will come legal action. Ignoring these notices can cause you to lose
Know the Process of Foreclosure
: Prior to initiating a foreclosure, the
lender must serve a notice of default and notice of sale
must be recorded with the register of
deeds. Not less than ten (10) days after the recording of the notice
, a copy must be sent to
the borrower, and others such as junior lien holders or those have requested
- A notice of foreclosure
sale, which is usually incorporated
with the notice of default, must be sent to the borrower and all interested
parties 20 days prior to the date of the sale.
the notice of sale must be advertised for five (5) consecutive weeks with
the last publication at least ten (10) days before the sale but no more than
thirty (30) days before the sale.
– Your banker may be able to refinance the
loan, or your creditors may be able to give you repayment options. Contact a
credit counselor. Sure you will feel like a failure or worse, but take
responsibility for your actions. Contact a bankruptcy attorney. That sounds
contrary to taking responsibility, but you need to know your options so you can
make informed decisions.
a professional real estate investor
. You may want to sell your home fast to get
out of the problem or to save your credit rating. Styl Properties, Inc.
is here to help
homeowners out of any kind of distressed situation. As investors, we can
help homeowners out of just about any situation, no matter what! There are no
fees, upfront costs, commissions, or anything else. We offer the
simple honest truth about your home and how we can help you sell it fast to
resolve any situation.
us a ring. We would love to help you understand the process and to answer all
of your questions. You can reach us at 402 999.0577.