How Does Foreclosure Defense Affect a Credit Score?

Dispute

When you have a foreclosure on your credit report, it brings down your credit score. You may feel that the foreclosure information is incorrect or unverifiable in some way. For example, your lender might have gone out of business or merged with another company. This may lead you to defend yourself by disputing the information or demanding that the credit bureaus verify it with the new company.

If the dispute is resolved in your favor, the information must be removed and your credit score will go up. The first step in your defense is to get a copy of your credit report from Experian, Transunion and Equifax. You are entitled to one free copy from each of them on a yearly basis. Verify that the foreclosure is showing up on your reports. If it is, file a dispute with the credit bureaus.

Follow-Up

You will need to follow up on your disputes to see how your foreclosure defense is affecting your credit score. The credit bureau must investigate your disputes and seek to verify the foreclosure information. If it is not able to do so, it must remove the information from your credit reports. This will have a very positive effect on your credit score.

You should receive a letter detailing the outcome of the dispute. If you don't get one within 60 days, request new copies of your credit reports to see if the foreclose information is still there. If it is, your credit score will be negatively affected. Follow up with the bureaus by asking for written notification of the dispute outcomes.

Consumer Statement

If the credit bureaus are able to verify the foreclosure information, it will continue to bring your credit score down. You have one more defense option that will not directly bring your credit score up, but it might influence lenders in a positive way. You can add a consumer statement to your credit reports stating the reasons for the foreclosure and defending yourself by explaining any extenuating circumstances.

If you believe there is incorrect information and the credit bureaus will not remove it, you can also put that in the statement. Lenders will see this information when they request a copy of your credit report, and they can take it into consideration when they make a decision.