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Will a Foreclosure Ruin My Credit Forever?

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In a Nutshell

A foreclosure will stay on your credit report for seven years, but your creditworthiness will not be negative forever. You can take steps to repair your credit after foreclosure and start building a positive credit history. Read more to learn how you can overcome a foreclosure, rebuild your credit history, and what steps you can take to buy a house after foreclosure.

Written by the Upsolve TeamLegally reviewed by Attorney Andrea Wimmer
Updated March 31, 2022

Having a foreclosure in your credit history doesn’t mean that you will be haunted by a bad credit score forever. You can improve your credit report and credit score. In this article, we’ll help you understand how you can overcome a foreclosure and rebuild your credit history. You’ll learn how to find out more about your foreclosure and credit and what steps you can take to buy a house after foreclosure. Keep reading to learn more about how to move forward after foreclosure. 

How Long Will a Foreclosure Stay on My Credit Report? 

Like many other types of debt, a foreclosure stays on your credit report for seven years. The magic number is seven years because of a law called the Fair Credit Reporting Act (FCRA). The seven-year clock starts ticking from the date of your first missed mortgage payment. 

Other negative credit information like delinquencies and late payments will also stay on your report for seven years. Combined, this negative information will lower your credit score and make it harder for you to qualify for home loans, auto loans, and credit cards. It could also hurt your chances for an apartment or job. 

How To See if a Foreclosure Remains on Your Credit Report 

To improve your credit after foreclosure, the first step is to request a copy of your credit report from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion. It’s easy to request a free copy online. You can also call 1-877-322-8228 to request your report if that’s easier for you. 

By law, you can get a free credit report from each bureau every year. Your credit report is like a diary of your financial history. It will show your credit lines, payment histories, mortgages, car loans, bankruptcies, and foreclosures. Credit scoring companies examine credit reports and analyze information to develop a credit score. 

Your credit report will include late payments, missed payments, and your foreclosure, but it won’t include your credit score. Unfortunately, Experian, Equifax, and TransUnion charge a fee to provide a credit score. You can try calling a current lender or credit card provider to find out what your credit score is. Some companies will let you know your credit score without charging a fee. Keep in mind that credit scores differ between credit bureaus, credit scoring companies, and types of loans. 

How Long Will a Foreclosure Affect My Credit Score?

A foreclosure proceeding usually doesn’t start until after four months of non-payment. It usually doesn’t appear on your credit report until a couple of months after the mortgage lender starts the foreclosure process. It will stay on your credit report and affect your credit for seven years, but the effect of the foreclosure will be lighter as time passes and you improve your credit. 

A credit score is calculated using a formula that is developed by credit-scoring companies, such as FICO and VantageScore. The FICO and VantageScore formulas take into account how timely your payments are, how much debt you owe, how long you’ve been making payments, the type of debt you have, your credit utilization, and your current credit activity. 

But, those factors aren’t all treated equally. Credit reporting agencies also report information at different rates. A delinquency could appear one week on an Equifax report and another week on a TransUnion report. Different credit scoring models weigh the importance of credit events differently. Typically, your payment history and the total amount of your debt are the two biggest factors in weighing creditworthiness. Keep your debt low and your payments current and you could have a good credit score. 

Even if you make timely payments and reduce your debt, the foreclosure could still limit your ability to take out loans and qualify for credit cards while it’s on your credit report. Fortunately, that’s not true for all loans. There are certain home loans you may be able to qualify for after foreclosure, and you may be able to get a secured credit card. 

If a foreclosure was an emoji on your credit report, it would be a sobbing emoji, but the tears wouldn’t last forever. After seven years, the foreclosure should be removed from your credit report. There are things you can do to avoid those tears and prevent a foreclosure proceeding if you don’t want a foreclosure to appear in your credit history and ruin your credit score.

How Will a Short Sale Affect My Credit Score?

A short sale will affect your credit score even though the words “short sale” don’t appear on your credit report. A short sale happens when a person facing foreclosure can sell their house for less than the amount owed. They can either be forgiven for the remaining amount of debt or have a deficiency balance left to pay. The deficiency balance is the amount remaining on the mortgage loan after the short sale. It will be lower than the original mortgage debt. 

Credit scores consider the balance of your total debt owed. The fact that you owe less debt after a short sale is a plus. Experian will report a short sale as “not paid as agreed” and, like foreclosure, it will remain on your credit report for seven years. That has a negative impact on your credit score. 

If the remaining balance of your mortgage is forgiven, it will be treated like a debt settlement. Your credit report will have a notation that the agreement was modified. That leaves a negative mark. But, since your total debt is lower, there is also a positive impact. Other delinquent debt will have a negative impact. But with time and effort, you will be able to buy a house again!

If you have some equity in your home, your mortgage lender might consider a deed-in-lieu of foreclosure. In this scenario, you would sign over the deed to the house. In exchange, the foreclosure proceeding wouldn’t happen and the mortgage debt would be cleared. The impact on your credit report would be more positive than a foreclosure or a short sale with a delinquent balance. 

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How Long Before I Can Buy a House Again After a Foreclosure? 

You’ll need a decent credit score, sufficient income, and a significant down payment to qualify for a conventional home loan for a new mortgage. But if you have a foreclosure on your record, you will not qualify for a mortgage with many lenders. Fannie Mae and Freddie Mac loans are conventional loans that require a waiting period of seven years for borrowers who have had a foreclosure, but there are exceptions. 

For instance, if a borrower can prove that the foreclosure happened because of extenuating circumstances, one might qualify for a loan sooner than in seven years. Examples of extenuating circumstances include a job loss, divorce, or illness. If one does qualify under their special circumstances, the home must be for a personal residence and meet other eligibility conditions based on the value of the home and the loan.

If you qualify for a VA or FHA loan, you won't have to wait that long. VA loans are from the Department of Veterans Affairs and FHA loans are from the Federal Housing Association. You might only have to wait two to three years for a VA loan and three years for an FHA loan. You’ll have to wait an extra year for a VA loan if your foreclosure was for an FHA loan. 

How To Rebuild Your Credit After Foreclosure

Rebuilding your credit will take some time and effort, but investing in credit repair is an investment in your financial future. Your interest rates on loans will be lower, and that will save you money in the long run. You can build credit repair habits into your weekly routine. If you’ve ever researched a product before you bought it, purchased something online, or left a review, you can repair and rebuild your credit. 

  1. Monitor your credit report. Think of this as watching your bank balance. At any time, there could be a wrong amount, a wrong date, or something missing. Worse, you could be a victim of identity theft. You’ll want to fix that. 

  2. Fix Errors. If your credit card got charged $20.00 for a pair of socks and the online price was $3.00, you’d probably take action to get the error corrected. Take that same action with your credit report. Big or small, a reported debt or delinquency that isn’t yours will hurt your credit score. Your credit history affects your financial future, so start thinking of these errors as taking money and opportunity from you. Call the creditors, report the error to the credit bureau through their online reporting form, and then go back in a week or two to make sure the error is corrected. By law, credit bureaus must report accurate information, but they don’t always know when information is inaccurate. So, it’s up to you to check.

  3. Live your best credit life. Spend and save to build the best future for yourself. That means that you need to make your payments on time and limit your credit debt to 30% of your available credit. If your credit cards are already maxed out, start paying them down and celebrate when you reach that 30% goal! Just be sure to celebrate within your budget.

  4. Give a secured credit card a chance. It might seem silly to give a new credit card company money so you can use it slowly, but using a secured credit card is an easy way to build back good credit. The payments you make are reported to the credit bureau. Hopefully, those are on-time payments, leaving a positive mark on your credit score. Your good credit history will start to outshine your bad credit history. You might even get offered an unsecured credit card with a higher credit limit! Just be sure you can make the payments.

Let’s Summarize...

A foreclosure will stay on your credit report for seven years, but your creditworthiness will not be negative forever. You can take steps to repair your credit after foreclosure and start building a positive credit history. Take an active role in this by ensuring the information on your credit reports is correct and report any information that is incorrect. You can also take heart in knowing that though it may take some time, you’ll be able to buy a house again one day. A foreclosure might force you to move, but it can’t stop you from moving forward. 

Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer


Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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