Sometimes foreclosure is inevitable. Unfortunately, the aftermath of a foreclosure affects more than just where you live--it also affects your credit score, and can do so for years to come.
Significance
A foreclosure on your credit report tells lenders you've defaulted on a loan, and are therefore a risky proposition when it comes to loans and credit. "Foreclosures are among the worst things that can happen to a person's credit scores; only bankruptcy is worse," says MSN Money's Sally Herigstad.
Effects
Your credit score will go down after a foreclosure; exactly how much it will drop depends on several factors, including your credit score before the foreclosure. The higher your credit score, the more drastic the comedown, but regardless, expect your credit score to drop between 85 and 160 points.
Potential
Although your credit score can rebound as long as you use credit wisely after a foreclosure, expect it to take at least seven years for your credit score to completely recover.
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