Credit History Effects
The Effects of Mortgage Foreclosure on Your Credit History
Assessing the credit history effects of foreclosure can allow a homeowner to make a wise choice in handling the default of a home. If your credit score will not be necessary for taking out future loans, then you may not need to be concerned about the impact of foreclosure on your home. You may also be able to afford to take an impact on your credit history for only being 30 or 60 days late in making a mortgage payment. Here are some of the ways that your credit history will be impacted in the process of strategic default or choosing to continue with the foreclosure of your home.
Fair Isaac, the creator of FICO scores, has recently released a list of the effects that a homeowner experiences in the strategic default or foreclosure process. For a mortgage payment that is 30 days late, a credit score will be impacted with a deduction of anywhere from 40 to 110 points. Mortgage payments that are 90 days late, a credit score will be impacted with a deduction of 70 to 135 points. When an actual foreclosure proceeding is entered into a credit score, this will cause a deduction of 85 to 160 points in a credit score. A foreclosure will remain noted on a credit report for up to seven years after the actual sale has occurred. Also, a credit score can begin to rebound within two years of a person making consistent payments after a foreclosure.
For homeowners who are facing financial problems, taking a hit on a credit score may be the best way out of a difficult situation. Homeowners should be aware that there may be future issues in attempting to obtain a lease from a landlord. A lower credit score will also cause the payments for a future mortgage or auto insurance to escalate. Despite these impacts, there are ways to negotiate and continue to be able to obtain a lease or favorable terms for specific loans in the future. Working with a loan modification attorney can help a homeowner minimize the effects of foreclosure on one's credit history and credit score.
