Need A Foreclosure Removed From Your Credit Report?

Need A Foreclosure Removed From Your Credit Report?

What is a foreclosure?

When you purchase a home and take a loan to get the home, you receive a mortgage. The agreement between you and the bank is that you will make payments and once you have paid off the loan, you will completely own the home. Unfortunately, sometimes people fall behind in their mortgage and end up in foreclosure. A foreclosure is a legal process where the bank seeks to take the home back from you because you have defaulted in the agreement.

Is a short sale better than a foreclosure?

Yes and no. A short sale is when an owner is selling a home worth less than the mortgage owed on the home. A short sale used to be a way to keep losing your house from damaging your credit so badly. That is not the case anymore. A short sale and foreclosure can equally damage your credit score. The advantage of a short sale over a foreclosure is that you may be able to buy another house sooner. A person who has a previous short sale on their credit can apply to buy another home through Fannie Mae after they have re-established their credit. Fannie Mae requires borrowers to demonstrate that they have re-established their credit following a significant derogatory credit event, such as a foreclosure, bankruptcy, pre-foreclosure sale (commonly known as a short sale), or deed-in-lieu of foreclosure. Fannie Mae has minimum waiting periods that must be met before the borrower is eligible for a new loan following such an action. After a foreclosure a person must wait 7 years before reapplying through Fannie Mae. After a short sale they must only wait 3 years, 2 years if they had extenuating circumstances.

How long does a foreclosure stay on my credit report?

A foreclosure can cause significant damage to your credit score, dropping it by anywhere from 80-150 points. A foreclosure stays on your credit report for up to 7 years. Sometimes a person has to contact the credit bureaus to have them remove an obsolete negative mark on their credit because the foreclosure wasn’t “automatically” after the 7 year mark. This is another reason why it is so important to monitor your credit report for inaccuracies.

Can a foreclosure be removed from my  credit report?

Yes, in some cases a foreclosure can legally be removed from your credit report. Removing a foreclosure from your credit report would likely significantly raise your credit score. Contact us for an expert evaluation of your credit report to see if we can help.