How long will it take to recover a Credit Score from Foreclosure?

[Anonymous]

Hey Everyone, I was curious if I could get a little input. Unfortunately I am considering foreclosure based on the situation I am in with a bad loan and big depreciation. So without discussing mortgage issues, my questions is... If I were to foreclose, how long would it take to realistically get my credit score back up to where it is now, 750? Is that even feasible? How long before I could even get a basic credit card to my name after a foreclosure? ANY input would be great. THanks!

[fused]

FICO scoring wise, a new foreclosure will tank your scores. How bad depends on how it's reported on your credit reports. Though foreclosures are considered to be public records, they usually report as a derogatory TL (account) by the lender. If it reports as public record, it might be less damaging to your scores because FICO scoring does not consider $$ amounts with regard to public records.

If you are unlucky and it reports as a derog TL, and it also reports lates and balances this could tank your scores even further. This is my guess:

- if this foreclosure reports as a derog TL with a large unpaid balance and/or late payments, a drop in scores between 60-150 is certainly possible given your current score.

- if it reports as a public record, a drop in scores between 50-100 points

Keep in mind most of the damage with most new baddies takes place in the first two years. After that it has less of a negative impact to your scores. Is there any way you can avoid a foreclosure?

[Anonymous]

Thanks so much for the reply!!! I would love to avoid foreclosure, but at this point, I do not think I have any other options. - Home value decreased by $60,000 - 80/20 Interest only loan - Loan to Value not good = no refianance So I'm not sure I have much of another option. Another question... When I was late on a mortgage payment, it tanked my scores almost 100 points (From 634 to 536). Won't a foreclosure be much worse? Thanks again!

[fused]

It depends, how late were you?

[Anonymous]

Well, it was the banks fault, I got it removed, but since it was an 80/20 loan, in had me late for each one, which obviously compounded. How long will it take for my score to be in the 650 range after a foreclosure?

[fused]

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jjmancini wrote:
Well, it was the banks fault, I got it removed, but since it was an 80/20 loan, in had me late for each one, which obviously compounded. How long will it take for my score to be in the 650 range after a foreclosure?

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Was it a 120-day late? A 100 points loss for a 120-day late is not common. As for your scores, the first two years after the foreclosure reports your credit life might be very miserable. After that, your scores will improve as years pass. My guess is you might get above 700 after 4-5 years, maybe. I seriously doubt you will have scores at 750 or higher not matter how old the foreclosure is and if it's still reporting.

[Anonymous]

Just to add to fused's reply, a FC can report  both as a derog mtg account AND a PR.

My FC in 2002 is still reporting. I was clueless about FICO until I opened another bank account in 2005, my score then was in the low 600's but there were a lot of other derogs from 2001-2002.

After some clean up and no derogs since 2002, I'm at 700-720.

FC can also be a serious blow to your self-esteem but sometimes there is no other option. If you must go through this I hope you have support from friends & family.

edit- I was able to get Orchard & Cap1 CC in 2002

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jjmancini wrote:
Well, it was the banks fault, I got it removed, but since it was an 80/20 loan, in had me late for each one, which obviously compounded. How long will it take for my score to be in the 650 range after a foreclosure?

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Message Edited by Anderson on 03-28-2008 09:15 PM

[Anonymous]

Thanks so much for the replies! So it does seem that not all is lost after a FC. That is at least some good news. How Can I affect how a FC is reported? It seems like that would not be up to me... J.J.