The Impact of Foreclosure on Your Credit Score

The Impact of Foreclosure on Your Credit Score

680 FICO Credit Score780 FICO Credit Score

The impact of foreclosure on your credit score can mar your credit report for seven years from the date of your first missed payment. According to U.S. 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 Score

Financial 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?

Caroline 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.

FICO credit 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? FICO bases your score on many different pieces of credit data in your credit report. FICO groups your data into five categories, which determines your FICO Scores.

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 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. 

There Are Steps You Can Take to Avoid Foreclosure.

Contact your lender and level with them. They have seen this before and will demand you take steps to fix it. Steps to take may require you to sell your toys and make significant cuts in your spending.

Do not ignore your mail. Many have been in your shoes. At first, many threw the mail warning of trouble 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 everything.

Know the Process of Foreclosure: Before initiating a foreclosure, the lender must serve a notice of default. Notice of sale must be recorded with the register of deeds. Not less than ten (10) days after the recording of the notice of default, a copy must be sent to the borrower and others, such as junior lien holders or those who have requested such notification.

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 sale date. 

Generally, 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. 

Contact Professionals – 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 to make informed decisions.

Contact a professional real estate investor.  You may want to sell your home fast to get out of the problem or save your credit rating. Styl Properties, Inc. is here to help homeowners out of most distressing situations.  As investors, we can help homeowners out of just about any problem, no matter what! There are no fees, upfront costs, commissions, or anything else.  We offer the simple truth about your home and how we can help you sell it fast to resolve any situation.

FREE information on How to sell your house fast

Styl Properties, Inc. is here to help homeowners out of any distressed situation.  

As investors, we are in business to make a modest profit on any deal. However, 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 truth about your home and how we can help you sell it fast.

Give 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

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