How Long Does Foreclosure Remain On Your Credit Report?
October 13, 2008
Foreclosure can harm your credit report and lower your credit score. The question, however, is when the pain will end.
The answer, as with anything related to credit reporting, is not so simple.
A judgment of foreclosure can remain on your credit report for up to seven years. But the truth is, you don’t care much about that.
Why? Because credit reporting is based in part on the recency of the negative information. Old news is less relevant than current events.
If you have a foreclosure in your past, don’t despair or think that it will keep you from buying a house in the future. A foreclosure on your credit report does have a large impact on your credit score; it can lower your score by as much as 200 points. But there are things you can do to counter-balance that.
If your foreclosure is recent, within the last year or two, your greatest asset is patience. Use this time wisely to rebuild your credit payment history and up your credit score.
Don’t be in a hurry to obtain a mortgage for a house or take out a large vehicle loan. Remember that a low credit score will result in much higher interest rates and may even prevent you from getting a loan. As more time passes, the foreclosure has less impact on your overall credit score. After three years have passed, you should be able to build your credit score up to considerably lessen the effect of the foreclosure.
Lenders will continue to see the foreclosure on your credit score but it will carry much less weight if they see that you have been rebuilding your credit by making all your payments on time and spending money conscientiously. Re-establishing your good credit will take time and effort. But the negative effects of a foreclosure can be overcome. In the end, it will pay off with lower interest rates and lower payments, plus you will have the pleasure of having learned from your financial mistakes.
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[...] or late, the lender is likely to report that payment to the credit bureaus, which will damage your credit score. On top of that, the majority of lenders will charge a 5% late fee on delinquent payments. Once [...]