A foreclosure can ruin your credit and make it impossible for you to get a mortgage. But the report of a foreclosure leaves your credit record after seven years (and sometimes less), allowing your credit rating to rise again.
As the Wall Street Journal reports, “Fair Isaac Corp, which developed the widely used Fico Credit Scores, estimates that there were 910,000 consumers whose credit reports showed they had foreclosure proceedings begin on their homes between October 2007 and October 2008. Of those, some 264,400 had no evidence of the event on their credit reports by last October. That number will rise by up to 645,600 by the end of this year, according to FICO.”
FICO credit scores range from 300 to 850 and most mortgage lenders generally require at least a 620 to 660 score to approve applicants. FICO estimates that roughly 12% of the people—or about 109,000—who had foreclosure proceedings tacked onto their credit reports between October 2007 and October 2008 had a Fico Credit score of at least 680 by October 2014, according to the Journal.
The three major credit-reporting agencies use a seven-year period for negative information like foreclosures that starts from the date of the first missed payment. Those who keep current with other loans during that seven-year period often achieve a good credit score shortly after the removal of the foreclosure from their record.
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