How Will A Foreclosure Affect Your Credit?

By Mike Wayman

In today’s economy it is not surprising that many people are dealing with foreclosures. In fact, there are many tv specials that report the substantial amount of foreclosures that are prevalent today. If you have foreclosed on a loan or are at risk or foreclosure, your credit score is definitely going to be effected.

A credit score or FICO score indicates your ability to pay your bills. Anything can change this score, and a failure to make a loan payment for 30 to 90 days will definitely result in a decrease of your score. Additionally, every time you further default on payments, your score is further affected – it is like a rippling effect.

Most people who have foreclosure on their credit scores are denied credit for up to 7 years. If they are lucky enough to get credit to pay for something, it will most likely be at an extremely high interest rate. However, some people say that this cannot be proven for sure. The researchers do suggest, however, that your credit score will be lowered by 100 to 150 from a foreclosure.

Regardless, your credit score is a valuable asset. If you have not foreclosed yet, do whatever possible to avoid it. And, if you already have a foreclosure on your record make sure that you are doing everything possible now to establish a positive credit history.