Will A Foreclosure Affect My Credit?

Once you start taking out credit cards and other loans, you start to think about your credit rating and score. The better your credit, the more likely you are to receive favorable loan terms when the time comes to borrow money. This translates to lower payments, which is always a good thing. But if you pay late or fall significantly behind, your credit can take a hit. So it is only natural to wonder what affect a bankruptcy or foreclosure will have on your credit. These events are reported on your credit, but may not be as damaging as you might imagine. In fact, people with these types of marks on their credit are often times able to obtain new financing a short time after the event, without a lot of trouble.

Here are some examples of what happens to your credit when your home goes into foreclosure:

           

•         The fact a foreclosure was initiated against you is noted on your credit report.

•         The outcome of that action might also find its way to your report, so if you are able to negotiate a short sale or offer a deed in lieu of foreclosure, the impact on your credit is not as great.

•         If you were already pretty far behind on payments when the foreclosure was started, your credit has already been noted that you are delinquent on your mortgage payments. The addition of a foreclosure action does not cause significant harm in this instance.

Not long after you come out of foreclosure you can expect to start receiving offers of credit from various lenders. Most times these offers are not at as good a rate as a consumer without a foreclosure on their credit, but they do give you the chance to reestablish your credit rating. If you are able to make the payments and decide to take on a new mortgage or other loan, you can quickly bounce back from any damage the foreclosure notation has had on your credit score. The key is to evaluate the offer, go through your budget to make sure the payments are manageable, and make a decision that fits your finances.

For more information about foreclosure or bankruptcy, contact us at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.