Three Ways Foreclosure Affects Credit




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Foreclosure is almost never a fun topic but if you’re experiencing it, you need as much information you can find. One of the most important things to know is that it affects your credit. Here’s how:

Credit Score Drops

As expected, your credit score takes a pretty serious hit. Unfortunately, the better your score, the more points it will drop.
 

It’s Reported

A foreclosure will show up on your credit report and remain there for seven years. It is seen as only slightly better than bankruptcy.

Can’t Immediately Buy Another Home

After foreclosure, you will have to wait to apply for most loans. For a conventional loan, the wait is seven years. The wait time for a Department of Veterans Affairs loan is two years, and for a FHA loan it is one year.
 
If your home is being foreclosed on, be sure to factor these things into your plans. Stay current with the rest of your financial obligations to avoid further damage to your credit. Also, make sure to create a plan to repair it as soon as possible.


By: Alecia Stanton



Related Categories

  • Housing
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