Foreclosures Tips

What You Need To Know About Credit Repair After foreclosure

Foreclosure is very serious. It hurts your credit score and makes it harder to buy a house or rent in the future.

Your credit will get affected if you go through foreclosure or give your lender a deed in lieu of foreclosure or if you go in for a short sale. A foreclosure or deed in lieu of foreclosure can result in a loss of up to 300 points on your FICO score. So if your FICO score was 700, it could go down to 400. A short sale will result in a loss of 80 to 100 points. This means a short sale with a previous FICO of 680 will see it fall to 580 to 600.

Foreclosure is a public record. A foreclosure and delinquent payments will show up on your credit report. It will remain for up to seven years. It can be very difficult if not impossible depending on the reason for the foreclosure for you to obtain credit once foreclosure shows up in your credit report. Under federal law, you have a right to have an explanation entered into your credit report and you should do so if there were extenuating circumstances which caused the foreclosure.

Credit repair may seem impossible if you are buried in debt. But it is possible. Credit repair is not magic. It’s not an overnight process. It takes time. It requires efforts on your part. Credit repair is legal and permitted by law. Credit repair does not mean that your credit will be restored to perfect status. In almost all cases, you can get some improvement in your credit score. Patience is key to credit repair. If you are successful at credit repair, you will be able to get a credit card, home loan, auto loan, refinance, etc., at better interest rates.

A credit report is a history of how you pay your financial obligations. When you borrow money or apply for credit for the first time, your credit report is created and is updated on regular basis. Your lenders will send the credit reporting agencies or credit reporting agencies specific and factual information about their financial relationship with you on regular basis. This information includes when you opened up your account, whether you make your payments on time, whether you missed one or more payments, etc.

The credit reporting agencies receive this information directly from the lenders and retain it to help other lenders make decisions about granting you credit. Your credit report contains all the information received from your lenders and provides a picture of your financial health. All lenders will request the credit reporting agencies for your credit report whenever you apply for a loan or credit. Your credit report helps them determine the risk factor involved in providing credit to you.

You have the right to review your files and to be told whether the information has been given to anyone. You also have the right to have the information contained in your credit report explained to you and to make copies of that information. A credit reporting agency is not allowed to require you to sign a waiver or release before you can see your file.