How a Foreclosure Can Affect Your Credit Rating

foreclosure credit damage

Your credit rating can affect your ability to secure a loan for a home, vehicle, or business. Some employers even check potential employees’ credit scores. So your score can even affect your employment opportunities. Therefore, it is important for your future that you learn about your credit score and how a foreclosure may affect your future.

Your score is based on your payment history, the amount you owe, the length of your credit history, the types of credit you use and the credit you have available. Your score can take a hit every time you make a late payment. Your score can also drop dramatically if you file for bankruptcy or have your home foreclosed.

It is common for people with credit scores as high as 700 to see their score drop to 400 after a foreclosure. In other words, your score can go from “good” to “poor” in a short period of time. The good news is that you will have an opportunity to repair your credit.

A foreclosure can remain active on your credit report for seven years, but it won’t ruin your score for life. If you keep all of your credit obligations in good standing, your score may begin to rebound within a couple of years of your foreclosure. Remember, your foreclosure is only one negative item on your report. Your foreclosure will cause less damage if it is the only issue on your report.

The best way to recover from a foreclosure is to keep your finances under control. It is advisable to keep only a few credit cards and to make payments on time every month. Even if you can only make minimum payments, it is preferable to miss a payment than make a late payment. Create a budget, stick to it, and stay on top of your bills.

Going through a foreclosure can be stressful. Remember that you are not alone. There are resources available to help you understand your situation and professionals who can guide you through the proceedings. You will get back on your feet and your credit score will recover. An experienced Orange County foreclosure attorney from McFarlin LLP can help explain your options. To learn more through a free consultation, call us at (888) 728-0044.