The effects of a home foreclosure on a credit rating can typically drop a FICO (Fair Isaac Corporation) score by 200 to 300 points. If you have a "good" credit score of 710, it could plummet to 410.
Effects
Although the effects of a home foreclosure on a credit rating are negative, they are not irreparable. A home foreclosure on your credit history can result in future rejections for loans, credit cards and employment, and much higher interest rates, but after the first two years you can begin effectively repairing your credit.
Time Frame
Typically, a home foreclosure remains on your credit report for seven years, since your credit history and score are based on the previous seven years of data. The negative effects of a home foreclosure on a credit rating are reduced by 50 to 75 points each year, and many people are able to qualify for a home loan within two to three years.
Considerations
Rebuilding your credit can be accomplished through the establishment of new credit accounts and small loans. Making timely payments and paying off credit card balances in full each month will help offset the negative impact of a foreclosure.
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