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Does A Foreclosure Damage My Credit?

By
Real Estate Sales Representative with Right At Home Realty Inc., Brokerage

It goes without saying that a foreclosure will damage your credit rating but how much damage depends on your financial situation before the actual foreclosure.  The good news is, the damage isn’t permanent, and a foreclosure won’t ruin your credit rating forever.

What is a foreclosure?

A bank foreclosure is when a bank claims ownership of a property because the owner has fallen behind on mortgage payments, or stopped making payments altogether.  When the bank takes possession of the house, they will usually auction it off to try to raise some money to make up for what they lost by financing the mortgage.

How does a foreclosure affect my credit?

Chances are if a home is in foreclosure, the homeowner has already missed several mortgage payments.  These missed payments will drop your credit score by several points.  Going into foreclosure will cause it to drop even further.  These are the average range of points you’ll lose if you go into foreclosure:

  • When payments are 30 days late: 40-110 points
  • When payments are 90 days late: 70-135 points
  • Foreclosure or short sale: 85-160 points

To continue reading this article click Does A Foreclosure Damage My Credit?

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