Foreclosure

Foreclosures show up under the public record portion of your credit report and can remain on your credit for 7 years. This is one of the worst things that can happen to your credit but it's not the end of the world.

Many people are losing their homes now a days due to the poor economy and rising unemployment. So much noise was made about sub-prime loans when the mortgage market imploded that it was hardly mentioned what the trickle down effect would be for everyone else. Now we are seeing the effect nationwide. Some areas have been hit harder than others. Some people simply walked away from their homes after the homes lost so much value that they couldn't justify paying for them any longer.

They will take a big hit on their credit score. One can't predict how many points their scores will drop. Everything in their credit history file will be weighed and measured I'm sure. And how fast their scores will bounce back will be effected by how they handle their other debts.

As with any other event that lowers your credit score, having a foreclosure will effect your interest rates on credit applications such as credit cards and car loans. Expect to pay higher rates and fees while your scores are down and out.

Currently to get a conforming home loan you would have to wait three years after a foreclosure before being able to apply. (That's even more of a waiting period than the bankruptcy waiting period of two years.) Mortgage rules and regulations change without notice from time to time so keep that in mind if you think you can go through a foreclosure and then wait three years to buy another home. These rules may not apply in three years!

After the 7 year waiting period, contact the three bureaus and ask them to purge the negative information from your credit report. Always remember that if you don't contact the bureaus, the negative stuff on your report might linger around forever.