Is My Foreclosure Still Hurting My Credit?

You’ve worked hard to put your foreclosure behind you. Your monetary issues leading to the loss are in the past and you’re ready to move on, both figuratively and literally. There’s just one small thing potentially holding back: your credit score.

But exactly how long do you have to worry about a foreclosure harming your credit?

Foreclosure Facts

A foreclosure will appear on your credit report as of your foreclosure filing date — not at the date of sale or tail-end of the foreclosure process. At this point, you can expect your credit score to take a big hit — up to 300 points, depending on the other negative information (like a first missed mortgage payment) that may already be on your report.

The foreclosure will generally remain on your credit report for the next seven years. But, while it will affect your score for that time, you won’t necessarily be saddled with a bad score for the duration.

A FICO study, for instance, found that a consumer with a 680 FICO Score (before the foreclosure event) could reach that same score level in roughly three years. And that type of credit score, while not worthy of the best terms and conditions, could net you financing, like an auto loan or, at the very least, a secured credit card.

Will I Have a Hard Time Getting a Mortgage?

Unfortunately, even as score rebounds, the presence of a prior foreclosure could make it tricky to score a new home loan. Just seeing that line item could make many mortgage lenders wary of approving your application, Scott Sheldon, a senior loan officer based in Santa Rosa, California and Credit.com contributor, said.

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“The longer in the past, the less of an issue [the foreclosure is],” Sheldon said in an email. “Waiting time is the most important thing they look at.” He estimates an applicant with a foreclosure on file would need to wait around three years to obtain government financing, like a Federal Housing Administration home loan, and could need to wait the full seven years for a standard 30-year conventional loan.”

Rebounding From Foreclosure

Still, all hope is not lost.

To up your odds of getting any type of new financing, you should focus on establishing and maintaining good habits. You can generally improve your credit scores over the long-term by making all payments on time, keeping debts low and limiting inquiries for new credit until your score rebounds. You can track your progress by viewing your free credit report summary, updated every 14 days, on Credit.com.

And it’s important to make sure the foreclosure is removed from your credit report once that 7-year waiting period elapses. You can check your credit reports for free each year at AnnualCreditReport.com. If a foreclosure appears longer than it should, be sure to dispute any inaccuracies with the credit bureau in question.

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