Are you facing foreclosure? If so, one of the first things you may be asking yourself is how this unfortunate circumstance will impact your credit score and your future. In part one of this two-part article, our team of people who buy homes in Clarksville, TN went over the means by which your credit score is calculated—and why this critical number matters so much. In this section, we will discuss how foreclosure affects your credit score and how to protect yourself.
How Will Foreclosure Affect Your Credit Score?
This is a complicated question, but no matter how you look at it, it’s not good news. After the foreclosure itself is finalized, your score will plummet by at least 100 points. Some experts report the drop to be even more extreme, cautioning foreclosure-bound homeowners that this drop could actually be as extreme as 200 to 300 points.
What’s more, this is not a one-time hit. Before someone falls into foreclosure, they have inevitably already missed a number of mortgage payments, and each month has already brought their credit score lower.
Long-Term Consequences of Foreclosure
If you are lucky, the foreclosure will clear off of your credit score after seven years, although this can depend on whether or not you defaulted on other payments while undergoing these hard financial times.
Your battered credit score will make it harder (or impossible) to get credit cards or loans in the years after going through the foreclosure. Keep in mind that this is true regardless of whether you start remedying your financial situation through a new job or heightened income. Speaking of new jobs, be aware that some employers even look at your credit score when deciding whether or not to hire you.
As far as buying another home is concerned, this will probably take some time. If your foreclosure had to do with extenuating circumstances such as a divorce or illness, you may be able to get a loan a little sooner than someone who simply walked away from an underwater mortgage. No matter the circumstances, you can expect to wait at least three to five years or even as many as seven or more years before you are eligible to buy a new home.
How To Prevent Foreclosure
When it comes to foreclosure, it’s in your best interest to get proactive! Don’t just wait for the bank to take your home. I buy houses in Clarksville, TN even if the foreclosure process has already started or your home needs to have repairs made. Our investors buy all kinds of homes and have already helped many people spare their credit scores from the ultimate hit.
If you would like us to make you an offer or would like some more details on how our process works, you can submit our contact request form.