Foreclosure and Its Effect on Your Credit Score
Foreclosure is the lawful procedure that terminates the rights of a homeowner and gives the ownership to the mortgage lender. This happens when a homeowner fails to pay the monthly mortgage payment as agreed upon.
Foreclosures can greatly affect one’s credit score, but you can avoid it if you have control over your finances to begin with. If you have been included in the foreclosure listing, it can decrease your credit score by up to 250 points. The severity of this damage, however, depends on your credit history.
If you have been paying your credit card bills and other loans on time, it can positively alter the impact of the foreclosure. If the amount of your current debt is considerably lower than the amount of your available credit, then the effects of the foreclosure on your credit score can also be tempered.
Payment history makes up 35% of your total credit rating, and your late mortgage payments are included here. Current debt makes up 30%, the length of your credit history accounts for 15%, your credit card and installment loan balance makes up 10%, and your recently opened credit account makes up 10%.
Foreclosure accounts are normally listed in the Public Information category of your credit report and it will be there for seven long years. However, during that period, the effects of the foreclosure on your credit score lessen as each year passes by. New home loan applications will be considered three years after a foreclosure.
If, by error, the foreclosure is still present in your credit report even after seven year, you can file a complaint so that the credit bureau will have it removed. The three credit bureaus that are held accountable for the information in your credit file are TransUnion and Equifax and Experian.
If you’re not good at handling your credit, a foreclosure is inevitable. And even though the effects of foreclosure lessen with time, you still don’t have an excuse to live outside your means.
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Categories: Credit Score Articles Tags: credit score factors, file, Foreclosure, foreclosure effects, history, house foreclosure, year
Credit Protection: Learn Your Rights In Applying For Credit, How To Build A Good Credit History, How To File A Complaint, And More
Credit Protection: Learn Your Rights In Applying For Credit, How To Build A Good Credit History, How To File A Complaint, And More
Credit is a convenience. It lets you charge a meal on your credit card, pay for an appliance on the installment plan, get a loan to buy a house, or more. With credit, you can enjoy your purchase while you’re paying for it, or you can make a purchase when you’re lacking ready cash.
But there are strings attached to credit as well… it usually costs something, and what is borrowed must be paid back.
To protect consumers from unscrupulous creditors, consumer credit protection has been written into the U.S. laws, and:
– bars unfair discrimination in credit transactions
– requires that consumers be told the reason when credit is denied
– lets borrowers find out about their credit records
– sets up a way for consumers to settle billing disputes
More specifically, did you know:
– you cannot be denied a credit card just because you’re a single woman
– you can limit your risk if a credit card is lost or stolen
– you can resolve errors in your monthly bill without damage to your credit rating
– you cannot have credit shut off just because you’ve reached age 62
It is important to know your rights and how to use them. This guide explains how the consumer credit laws can help you:
– shop for credit
– apply for credit
– maintain your credit standing
– complain about an unfair deal, and more.
Take advantage of the information in this popular guide and be prepared to get the most out of credit.
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Q&A: When you pay an over-due/write-off item, how long does that (lack of a better term) “bad credit” stay on file?
Question by Bronzed: When you pay an over-due/write-off item, how long does that (lack of a better term) “bad credit” stay on file?
When I was 18 I started getting credit cards and loans, and due to youth, ignorance and inexperience I missed several payments and I believe I even have a certain card “written-off” for the amount of $ 3. Now that I make good money, I’ve accessed my credit report to pay off all fees and late items. How long will those negative marks stay on my file? I’ve heard “7 years,” I’ve heard “a few months to one year.” Obviously I am now older and wiser and wish to have- and maintain- good credit. If bad marks are on my credit report for several years, is there any way to expedite the process of having them permanently removed? Thanks!
Best answer:
Answer by TRAC
Generally, 7 years. If you pay on an item, it (according to what I’ve been told) “restarts the clock”. If you can pay something off in one lump sum, that’s best. If it’s going to be on the credit anyway, it’s better to have it paid, albeit late, than not paid at all.
I’m in the process of repairing my credit. I’ve had some charge offs as well, those close to being removed I don’t worry with. However, if something has a ways to go, I’ll pay off one at a time until they are all paid. If nothing else, it shows some effort to repair and while some creditors don’t even care about that, others will.
Good luck.
What do you think? Answer below!
Categories: Credit Score Questions Tags: better, Credit, file, item, lack, long, overdue/writeoff, stay, term
How long does it take to get your credit score up after you file for bankruptcy?
Question by Unknown12: How long does it take to get your credit score up after you file for bankruptcy ?
Someone I know recently filed for bankruptcy not even a year ago. And she throws it in my face that her credit score is higher than mine and that she can get a house and I can’t. I don’t have anything wrong with my credit score and never filed for bankruptcy I just have a couple credit cards. Really how long does it take to increase your score? And don’t banks look down on people that file?
Best answer:
Answer by The Great Gazoo
bankruptcy lasts for 7 years after that you can try to rebuild credit
Answer by Good Credit Scores
Realistically, it just doesn’t matter what her credit score is. With a recent bankruptcy there’s no way a lender will give her the money for a house. And, if for some reason they do decide to provide a loan, they would jack up the interest rate to cover their risk.
Add your own answer in the comments!