When Does Foreclosure Appear on Your Credit Report?

A foreclosure can put a substantial ding in your credit rating and typically stays on your report for seven years. The official date of foreclosure is generally recorded as the day of the foreclosure auction or sheriff's sale, and the completed foreclosure will appear on your credit report by the end of the next data-reporting cycle.

Process

Once you are 30 to 90 days late with your mortgage payments, the lender can initiate the foreclosure process, typically by sending you a Notice of Default. At this point, before formal foreclosure proceedings have begun, the delinquent payments and penalty fees will appear on your credit report. If your delinquency is not remedied, the lender will issue a Letter of Demand, insisting that you bring your loan current or face formal foreclosure action. If you still fail to pay the amount due, including all assessed late fees and collection costs, the lender will file a lien (legal claim) against your property, take possession of your home and sell it at auction to recover the money owed.

Impact

When a foreclosure does appear on your credit report, it generally lowers your credit score by roughly 35 percent during the first year. For example, if your credit score was previously 755, a foreclosure could drop it by approximately 264 points down to a score of 491. The higher your score was before losing your property, the more of an impact a foreclosure will have on your credit score; whereas, if your credit has been suffering anyway, the drop may not be as significant. Your score will be impacted more heavily in the two years following a foreclosure, with the effects lessening over time.

Data Reporting

According to Maxine Sweet of Experian, creditors typically update your account information with the credit bureaus every 30 days in accordance with the creditors' billing cycles. The completed foreclosure may appear on your credit report within a few days or it may take a month to show up, depending on where the lender is in the billing cycle at the time of the foreclosure sale. Keep in mind, though, your credit score has likely already been impacted a number of times throughout the foreclosure process. The issuance by the lender of the demand letter, filing of the lien, missed payments and fees are all negative events in your credit report that will drop your score.

Repairing Credit

From a legal standpoint, there is no way to remove a foreclosure from your credit report in less than seven years. Additionally, once the seven years have passed, you must send a written request to each of the major credit bureaus -- Experian, Equifax and TransUnion -- to have the foreclosure removed from your credit report. Unfortunately, there is no instant remedy for repairing a damaged credit report, but it is possible to make some significant headway within roughly two to three years. Stay current on your debts and loans with timely payments, order your free annual credit reports and have any errors corrected, and you will be well on your way to repairing the damage.