Posted on: 24th May, 2006 07:15am
When you fail to pay back the mortgage and you're not offered a workout plan to continue payments, chances are that the property may be foreclosed. Foreclosure involves the lender taking away your property and selling it off at an auction in order to recover the unpaid mortgage debt.
However, if the market isn't good enough and the sale price comes out to be lower than the balance you owe, then you may have to pay the deficiency (difference between the sale price and what you owe).
However, if the market isn't good enough and the sale price comes out to be lower than the balance you owe, then you may have to pay the deficiency (difference between the sale price and what you owe).
How does foreclosure affect credit?
When it comes to foreclosure, most people are concerned about how foreclosure affects on credit rating. This is because until and unless one is able to rebuild credit after foreclosure, he will not be able to get credit/loans at better rates of interest. If the financial markets are not good enough, one may not even be approved for any type of credit or mortgage.
Moreover, if your credit isn't good, you won't be able to secure a job in case you're looking for a new one. Therefore, prior to a foreclosure, you should be aware of how foreclosure affects your credit score.
Foreclosure affects your credit score by 250 points. That is, if you have a credit score of 680, it will drop down to 430. So, it's better to avoid a foreclosure and request the lender for a loss mitigation plan so that you're able to keep the home or if at all you can't keep the home, then at least see that your credit doesn't get a big hit.
Moreover, if your credit isn't good, you won't be able to secure a job in case you're looking for a new one. Therefore, prior to a foreclosure, you should be aware of how foreclosure affects your credit score.
Foreclosure affects your credit score by 250 points. That is, if you have a credit score of 680, it will drop down to 430. So, it's better to avoid a foreclosure and request the lender for a loss mitigation plan so that you're able to keep the home or if at all you can't keep the home, then at least see that your credit doesn't get a big hit.
Foreclosure: How long will it affect credit?
Like any other negative item, a foreclosure stays on your credit report for 7 years. However, foreclosure affects your credit score predominantly for the first 2 years. But, once you start rebuilding your credit, it gets better with time, though it'll take almost 2-4 years to get a mortgage after foreclosure, that too at comparatively better rates of interest.
How can you repair credit after foreclosure?
Here are 3 tips to help you repair credit after foreclosure.
- Prepare a budget: Look at the way you spend your money. Plan a budget and try to follow it. Understand why your home was foreclosed. If there's anything that you could have avoided, try to fix it now. Track if you are spending extra and adjust your budget accordingly. Use the Simple Budgeting tool and prepare a well-planned budget.
- Pay your bills on time: Keep paying your bills and debts in time and make sure your creditors report them to the credit bureaus. If required, take help of a credit counselor or avail debt management plan in order to reduce your debt burden. This is because high debt load will affect your credit score and bring it down. Don't ignore small expenses as otherwise they can be sent for collections.
- Get a credit card: You can apply for credit cards and use it to make small purchases. But pay off the balance in full every month. This will reflect that you can manage credit responsibly thereby borrowing only what you can afford and paying it back in time. However, go for a credit card only if you have adjusted your expenses.
If you were quit claimed on to a property and are not on the loan. If the property get foreclosed on will this effect your credit? Will a forecoseure show up on your credit report? And how do you find out if the other person on the title who does carry the loan has missed payments and may be near a default?
Credit effects of a foreclosure can be devastating to your credit report and many other aspects of your life. It will make your score drop many points and stay on there for a long time to come.
a bad credit score will affect your ability to get a checking account, other credit needed and may also affect your ability to get employment, many employers these days are using credit background checks in their pre employment screening process, long gone are the days of just not paying a bill and just dealing with collectors, credit affects so much, take a strong hard look at what you have to lose before you let this happen and avoid it if at all possible. You have many options, explore them and try to avoid this route. goodluck
a bad credit score will affect your ability to get a checking account, other credit needed and may also affect your ability to get employment, many employers these days are using credit background checks in their pre employment screening process, long gone are the days of just not paying a bill and just dealing with collectors, credit affects so much, take a strong hard look at what you have to lose before you let this happen and avoid it if at all possible. You have many options, explore them and try to avoid this route. goodluck
Well said erb,
I think it is crazy that employers are doing credit checks on people now, they willl lose some good candidates that way.
I think it is crazy that employers are doing credit checks on people now, they willl lose some good candidates that way.
Many employers justify this by saying that they put equipment in peoples hands that is worth a lot of money. Many companies also extend credit cards to individuals for use in their jobs such as to purchase gasoline and other items needed to get the job done.
My husband worked with a guy, he put it all in jeapordy and ended up losing his job. He let all of his children use his company card for gas, raking up thousands of dollars of charges, when the company discovered this they had no choice but to let him go.
sad part is, his wife had cancer about a year before that and was in remission, I remember her coming to the christmas parties with a bandana on her head from the baldness from the chemotherapy, she was a very nice lady.
I don't know why he would put the medical benefits in jeapordy, the cost is sky high for cancer treatment and one that you must have to have any chance of survival.
People do crazy things, guess they figure they will never get caught and companies have to protect themselves from this type of behavior, so many have implemented the credit check as part of their pre employment screening.
My husband worked with a guy, he put it all in jeapordy and ended up losing his job. He let all of his children use his company card for gas, raking up thousands of dollars of charges, when the company discovered this they had no choice but to let him go.
sad part is, his wife had cancer about a year before that and was in remission, I remember her coming to the christmas parties with a bandana on her head from the baldness from the chemotherapy, she was a very nice lady.
I don't know why he would put the medical benefits in jeapordy, the cost is sky high for cancer treatment and one that you must have to have any chance of survival.
People do crazy things, guess they figure they will never get caught and companies have to protect themselves from this type of behavior, so many have implemented the credit check as part of their pre employment screening.
Wow, when you put it like that it makes a whole lot of sense why an employer would want to do a credit check, I guess if they are putting all that trust in people then they have a right to run the checks on them any way they please.
I would agree jbarto. I think this world has come down to places having to do creedit checks. I mean if you were risking losing your own money wouldn't you. I also thin their should be some trustable program that could help the innocent people rebounding from a life altering situation to rebuild credit worthiness.
But when people want credit bad enough they will make promises that they can not possibly afford, so these credit checks are put in place so the creditor can see the past history of someone who wanted something or needed something really bad, then after the newness wears off they stop paying or start paying late.
just so you know the property with your name will still show a foreclosure and being that its your property your credit wont be affected but it will show up on title.
My name is on the deeds of my sons house although I have a house of my own, I pay nothing towards my sons mortgage and do not want any proceeds from it. I am about to go for bankruptcy due to the recent credit crunch, and will loose my own house, I am worried that my sons house will be at risk so am trying to quitclaim asap, where do I get these forms from and is this the best action to take, my only concerns are for my sons property.
You can get them from a local title company or closing attorney.
Hopefully, you can get your name off it as soon as possible so that your son's property will be safe from the bankruptcy. goodluck with this.
I am very sorry to hear that you are going to lose your home. I know with the economy and the credit crunch their are so many people in your situation. I have heard on thne news that they are putting programs in place to help people. Maybe one of these could help you? Good luck and God Bless.
I am going thru a divorce and spouse is thinking of filing bankrupcy. He is willing to do a quitclaim on the property I'm living on. I want to keep it out of forclosure. Would doing a quitclaim and title transfer keep it out of forclosure? We also took a 2nd loan out on this same house in both our names, how do I get my name off of the 2nd loan? Is it possible?
hi guest,
welcome to our community forums.
quitclaiming property just to save the home from foreclosure may be considered as fraudulent transfer. and the lender may even sue you for this. to get your name off the second loan, either your spouse will have to refinance it or the best way is to pay it off. but your spouse is trying to file bankruptcy. which chapter is he looking to file?
regards,
jessica.
welcome to our community forums.
quitclaiming property just to save the home from foreclosure may be considered as fraudulent transfer. and the lender may even sue you for this. to get your name off the second loan, either your spouse will have to refinance it or the best way is to pay it off. but your spouse is trying to file bankruptcy. which chapter is he looking to file?
regards,
jessica.
How will the foreclosure on my investment property effect my ability to get a corporate credit card for company travel and how will it effect my current corp credit card (Amex)?
Hi Guest,
Welcome to forums.
Usually business credit scores range from 0-100 with any score equal to 75 and above implying an excellent credit rating. It's quite obvious that if you're in the business of investing in real estate, a foreclosure on your investment property will drop down your business credit score. And I think for a few months you won't be able to get another corporate credit card.
Thanks
Welcome to forums.
Usually business credit scores range from 0-100 with any score equal to 75 and above implying an excellent credit rating. It's quite obvious that if you're in the business of investing in real estate, a foreclosure on your investment property will drop down your business credit score. And I think for a few months you won't be able to get another corporate credit card.
Thanks