| How does a foreclosure effect your credit report is a | | | | for the same car as the "A" credit buyer! The |
| perplexing question. This is because Fair-Isaac | | | | collateral for the loan is the same car, so the "D" credit |
| Company, who started the credit scoring system, will | | | | person is unfairly penalized for his credit situation. |
| not share this information. What complicates the issue | | | | Your credit score "before and after" the foreclosure is |
| even further is that all the credit information reported is | | | | no conclusive answer as to how much the foreclosure |
| calculated into the individuals' credit score as it occurs. | | | | has hurt your credit report, but it is an indication. |
| The credit score is updated instantly whenever there | | | | Homeowners tend to believe that once they have had |
| is an inquiry, otherwise it sits waiting for some person | | | | a foreclosure they can never buy a home again. This |
| or institution to access it. | | | | is absolutely untrue, as we see people buying homes |
| To get negative information on your credit report | | | | within a year of losing their previous home. They will |
| concerning a foreclosure, the homeowner must not | | | | have to pay a higher interest rate unless their down |
| have paid his mortgage or loan payment for 30 to 90 | | | | payment is substantial, usually 15% to 20% of the |
| days. So to begin with, his score is decreased by the | | | | purchase price. But this sizable down payment is often |
| late payments. Usually, the homeowner is also late on | | | | obtained from friends or family members and carried |
| other bills because of his financial crisis and has | | | | as a second lien on the property. Also the credit score |
| additional late payments, collections, or judgments. So if | | | | reduction for the foreclosure is reduced as time goes |
| he had his credit pulled on a specific date before he | | | | on, until it settles at a minimal number after a few |
| started his personal financial decline, he would have | | | | years. |
| seen one score (i.e. 680). The next time he pulls his | | | | The foreclosure's immediate impact on an individual's |
| credit report, after he has been served with his | | | | credit report is estimated to be about 100 to 140 points. |
| foreclosure notice or even after the foreclosure is | | | | The bigger impact is from the late payments on other |
| completed; he sees his new score (i.e. 450). He is | | | | bills which quickly mount up. Doing a "deed in Lieu of |
| probably shocked and dismayed, especially when he | | | | Foreclosure" with the lender reports the same as a |
| realizes how much more interest the lenders want | | | | foreclosure. It is generally believed that a foreclosure |
| because of his low credit score. For example, an auto | | | | stays on your credit report for seven years, but it can |
| loan to an "A+" credit customer could be 0% interest | | | | stay on longer because it is part of the public record, |
| while for a "D" credit customer, it could be 11% or | | | | which could be open for 20 years. So make certain |
| higher. What does that actually mean? It means that | | | | when you do your credit restoration you have it taken |
| the "D" credit individual will pay $5,500 to $8,000 more | | | | off, if it isn't removed automatically. |