Negative items such as late payments can leave a lasting impact on your credit report and score. Unfortunately, foreclosures are particularly damaging, even if you’re already recovering financially from defaulting on a former home.
While it can be difficult to prematurely remove a foreclosure, it’s not impossible. If you’re close to the date it should automatically drop off, you may also consider waiting. No matter what plan of attack you choose, we’ll take you step-by-step to figure out the best course of action.
- 1 How long does it take to get a foreclosure off your credit report?
- 2 How can you remove a foreclosure from your credit report early?
- 3 How much does a foreclosure hurt your credit score?
- 4 Can you buy a house with a foreclosure on your credit report?
- 5 Bottom Line
How long does it take to get a foreclosure off your credit report?
When you’re deciding the best way to remove a foreclosure from your credit report, check the date to see when it should naturally fall off. In most cases, it’s scheduled to stay on there for seven years from the date the foreclosure was filed. If you use the date of your first missed payment as your benchmark, you’ll be disappointed. Check your old paperwork and find out when the filing date was.
From there, figure out how close you are to reaching the seven-year threshold. You may be relatively close to having it drop off. If that’s the case, it may be worth simply waiting instead of going through the dispute process. Review your financial goals and see if it’s possible to wait on making any decisions that would be impacted by having a foreclosure on your credit report.
For instance, could you hold off on applying for a new credit card or loan? You could potentially qualify for a better rate if you don’t have much longer to wait to get that boost for your credit score.
If you’re not anywhere close to the seven-year mark, however, you may be able to take matters into your own hands.
How can you remove a foreclosure from your credit report early?
It is possible to petition for early removal of a foreclosure on your credit report. While there’s no foolproof solution, there are three specific strategies you can undertake to increase your chances of success.
Here is our step by step process for getting that foreclosure deleted from your credit report for good.
#1: Check for Inaccuracies
Just as you would do for any other negative item dispute, you need to see if there are any errors related to your foreclosure listed on your credit report. Start off by ordering your three credit reports from Experian, Equifax, and TransUnion. You’re entitled to these for free once every 12 months, so take advantage of this benefit at AnnualCreditReport.com. With your copies in hand, review each line of the foreclosure listing for accuracy.
Don’t just look at the balance amount — check out each and every detail surrounding your account.
That means reviewing all of the dates associated with the foreclosure, the account number, and even the name of the lender. If you find anything that’s represented incorrectly, you’re ready to file a dispute with each of the three credit bureaus. Once they receive your letter, they’re required to request verification of the information within 30 days.
What happens if the foreclosure information isn’t verified within that time frame?
It must be removed from your report. If they do verify information concerning the error, they’re equally responsible for updating your credit report to reflect the accurate data.
#2: Contact the Lender Directly
Even if the first step doesn’t work, you still have more ways to try and get your foreclosure deleted. The next thing to do is to write directly to the mortgage lender who initiated the foreclosure proceedings. Just as you did with the credit bureaus, cite any inaccuracies listed on your credit report. Be forceful and flat-out tell them to remove the entry within 30 days.
Oftentimes, lenders either can’t verify the information because of poor record keeping, especially if the debt has been passed around to various collectors. Alternatively, they may just be too busy to make it a policy to investigate every single verification request the comes through their doors.
Either way, you may benefit from either of these scenarios by getting your foreclosure removed from your credit report directly by your lender. As always with any credit dispute, be sure to keep paper copies of any and all communications between you and the lender. This helps clarify any agreements that may be called into question later.
#3: Get Professional Credit Repair Help
One thing you need to be careful about when disputing a foreclosure is sounding frivolous. If you do, the credit bureau has grounds to dismiss your request. To make sure you present the strongest case possible, consider working with a professional credit repair firm. When you use a reputable company, you get to take advantage of legal professionals who understand the intricacies of the Fair Credit Reporting Act and other consumer laws.
You can generally get a free consultation before making any commitment to get an idea of whether or not they’ll be able to help your specific case. If they can, you know your chances for getting that foreclosure deleted for good are much improved. A credit repair company has success-driven processes in place to create a strategy tailored to you but also based on proven results from the past.
How much does a foreclosure hurt your credit score?
A foreclosure can have a major impact on your credit score. Unfortunately, the better your credit score was to begin with, the more damage is caused by having such a serious item added to your report. Prepare for a drop anywhere between 85 points and 160 points using the FICO scale.
In addition to your lower score, a foreclosure can make it tough to get access to new credit, especially early on. Regardless of what your score ends up being, lenders and credit card companies will automatically be hesitant to issue new credit.
Luckily, the credit effects of a foreclosure don’t last forever, especially if you implement a credit repair plan right away. That means paying down any other debt you have and making on-time payments of your other bills to rebuild your positive payment history.
Even though the foreclosure could potentially stay on your credit report for seven years, its impact on your score actually starts to diminish more and more each year. So while you’re likely to experience a big dip when the foreclosure first gets added, the damage to your score continues to lessen despite lenders being able to see that item listed. It takes time, but with some patience and consistent positive financial behavior, you’ll begin to rebuild your credit and get back on track.
Can you buy a house with a foreclosure on your credit report?
In many cases, you don’t need to wait the full seven years for a foreclosure to fall off your credit report in order to buy a new house. Depending on the type of mortgage you choose, you could qualify for a new home loan in as quickly as two to three years from your filing date.
You’ll have a better chance of qualifying if your foreclosure was a result of a financial hardship, such as a medical illness, divorce, or unemployment. If your foreclosure was a result of poor financial management or a high adjustable rate mortgage, you may have to wait longer.
You’ll have better luck with a government-backed loan such as an FHA compared to a conventional mortgage. If you’re serious about putting your homeownership goals on the fast track, consider talking to a mortgage lender about your situation. That way, you can get an idea of what you need to do to qualify, what your options are, and how fast you can start applying.
Plus, you can get a clearer idea of what kind of rates and terms to expect, since a foreclosure history will almost certainly cause you to get higher interest rates. When you talk to a lender directly just for gathering information, you can get a lot more details than you would by applying online. You also don’t have to worry about an application dragging your score down even further.
A foreclosure can certainly feel like a devastating life event, but you don’t have to suffer from its effects forever. Not only is it possible to get the foreclosure removed from your credit report early, it’s also possible to move on with your life and start working towards new goals.
Rather than feeling roadblocked by a past foreclosure, create a comprehensive plan to move forward. Try our three strategies for getting that negative item from your credit report. At the same time, be sure to understand how your credit score works so that you can implement the financial decisions that will help you holistically rebuild your credit over time.