Facing Foreclosure and Worried About Your Credit Rating?

A foreclosure will negatively impact your credit rating, and because of it’s negative impact on your credit rating, you should only do it as a last resort. A foreclosure can penalize your FICO credit score by as much as 200 or even 300 points. For example, lets say that you had 800 as your credit score, meaning you have excellent credit, then your going into foreclosure can bring that credit score down to a FICO score of 500. A FICO score of 500 is a very bad credit score.

Creditors will not offer you any credit or financing for about 24 months after you have been foreclosed on. This rule within the financial community is applied towards foreclosures and any other types of credit. So be prepared not to be able to buy a car, take out college loans, or even finance a small personal computer.

Foreclosure may also affect your ability to find an apartment as landlords will use your FICO credit score as a means to determine how reliable you will be as a tenant. other things you may have difficulty with are you trying to get a phone service of any type or hooking up cable because these service or utility companies will also run your credit to determine your reliability.

Even with all these negative setbacks that come with foreclosure, there is still some good news. The good thing is that the harmful effects of a foreclosure can be reversed by you, after the 24 month period has passed. A foreclosure will stay in your credit report for up to 7 years, and it is only after the seventh year that you can have the foreclosure listing removed from your credit report. The interesting thing to note however is that some lenders may offer you financing after two years for small loans. You can then expect to be able to purchase a home again from some lenders after around five years; however you will most definitely be assessed very high interest rates. If you do choose to finance a home with a high interest rate you will be able to refinance the home after the foreclosure has dropped off your credit report combined with the fact taht you have a stable payment history.