Public Records Could Plague Your Credit For The Better Part Of A Decade
Even if you repay the money you owe, public records with negative information typically remain on your credit reports for seven to 10 years.
Public records with adverse information may even occasionally wind up on your credit reports by mistake. According to a 2012 study by the Federal Trade Commission, one out of five consumers had an error on at least one of their three credit reports that was corrected by a credit reporting agency after it was disputed.
The good news is, in some cases, you may qualify for relief.
Experian®, Equifax® and TransUnion® have begun removing unverifiable public records from about 12 million credit reports.
The three major consumer credit bureaus recently adopted stronger public record data standards for consumer credit reports, requiring tax liens and civil judgments to include your name, address and either Social Security number or date of birth.
Millions of old public records dont contain all of this information, so the credit bureaus are removing them from consumer credit reports.
Theyre also removing medical collection accounts that have been or are being paid by insurance.
If you spot an error or an unverifiable public record that doesnt belong on your credit report, Credit Karma may be able to help you dispute it. And if all else fails, we can show you ways you can rebuild your credit.
Just remember, youre not alone. Were here to help.
What Happens After The Redemption Period
After the redemption period ends, the property is sold at a public auction. The proceeds from the sale go to pay off the mortgage, and any leftover money is given to the homeowner. If the property is worth less than the mortgage balance, the homeowner is still responsible for paying off the entire debt.
In some cases, the home may be sold for less than what is owed on the mortgage, and the lender may pursue a deficiency judgment against the homeowner. This allows the lender to recoup any losses by going after the homeowners other assets, such as savings accounts or future income. Once the debt is paid off, the homeownership process is complete, and the new owner takes possession of the property.
How Can You Improve Your Credit Score After A Foreclosure
Your credit score will be affected by a foreclosure for up to seven years, but there are steps you can take to improve your credit score during that time. One of the most important things you can do is keep current on all your other financial obligations and make payments on time. You should also try to keep your balances low on your credit cards and other revolving debt, such as car loans. Additionally, you can try to get a secured credit card or car loan to help re-establish your credit history.
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Be Patient And Research Loan Options
If it has been less than two years since your debts were discharged through bankruptcy, then you will need to wait to apply for a mortgage. If you lost your previous home to foreclosure, then you may have to wait longertypically at least three years.
You can use this time to work on building your credit up while also researching the requirements for different mortgage loans. The kinds of loans that you may able to get following a bankruptcy or foreclosure can include:
Each type of loan has different requirements regarding credit scores, income, assets, and debt. Of these options, an FHA loan may be best suited for someone coming out of bankruptcy or foreclosure. Its possible to get an FHA loan with a down payment as low as 3.5% and a credit score of 580. You could even purchase a home using an FHA loan with a credit score as low as 500 if youre able to put 10% down.
How To Prevent A Foreclosure
If youâve started to fall behind on payments and fear that you may not be able to get back on track, there are steps you can take to avoid losing your property. Remember, just as you want to keep your home, lenders want to help you keep your mortgage so they can get their money. For that reason, itâs always worth reaching out to your lender for help.
Here are some options that may allow you to prevent a foreclosure.
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Ask for a deferral. While rare, some mortgage lenders may be willing to give you a payment deferral if youâve hit a rough patch.
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Renegotiate. See if you can renegotiate the terms of your mortgage. You may be able to extend your amortization period or space out your payments more.
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File a consumer proposal. Consult a licensed insolvency trustee to see if you can file a consumer proposal. A proposal can give you breathing space to get your finances back in check so that you can afford to resume your mortgage payments.
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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 bythe Upsolve Team. Legally reviewed byAttorney Andrea Wimmer
Having a foreclosure in your credit history doesnât mean that you will be haunted by a bad credit score forever. You can improve your credit report and credit score. In this article, weâll help you understand how you can overcome a foreclosure and rebuild your credit history. Youâll 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.
Foreclosures: How Long Do They Stay On Your Credit Report
At a glance
A foreclosure stays on your credit report for seven years, starting from the date of your first missed payment. Read on to learn more about how foreclosure works, how it affects your credit, and how long it will stay on your credit report.
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So How Do I Get Rid Of Negative Public Records
Unfortunately, its not that easy.
The three major credit bureaus wont accept certain poorly sourced public records, and theyre proactively removing some tax liens and civil judgments if they cant verify whos responsible for repayment, along with some recent medical debts.
But theres no legal recourse for you to remove other, accurate public records from your credit reports.
If you spot an error on your TransUnion® credit report, Credit Karmas Direct Dispute tool may be able to help you challenge it. Since 2015, weve helped members remove more than $7.9 billion in erroneous debts.
You may also dispute errors on your Experian® and Equifax® credit reports directly through their websites.
What Is A Credit Report
A credit report is a document that gives a detailed look at your credit history. There are four primary areas in a credit report.
- Your personal information
- Your borrowing history regarding credit cards, mortgages and car loans, and other accounts
- If you ever faced bankruptcy, eviction, foreclosure, or other legal actions related to finances on your record and
- A list of companies or individuals who have checked your credit history.
Essentially, a credit report is a thorough handprint of your borrowing track record.
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You Can Rebuild Much Sooner
Don’t let the seven-year timeline stop you from acting you can begin working to rehabilitate your credit score right away. Help offset the negative mark by stacking up positive data on your credit reports:
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Pay all bills on time. Payment history is the biggest factor affecting credit scores. You want to build up a long track record of on-time payments so you look good to potential lenders in the future.
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Use 30% or less of your credit limits. The second-biggest factor in scores is how much of your credit limits you use, which is called credit utilization. The lower your credit utilization, the better for your score.
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If needed, look into ways to rebuild credit such as getting a secured credit card or credit-builder loan.
About the author:Sean Pyles is the executive producer and host of NerdWallet’s Smart Money podcast. His writing has appeared in The New York Times, USA Today and elsewhere.Read more
How Long Does A Foreclosure Stay On Your Credit
When you have big financial decisions looming, you may feel haunted by your credit history. American Credit can help with credit repair, so you can qualify for a home loan, buy a car, or increase your odds of being hired. A question our clients often have is, How long does foreclosure stay on your credit? Missing mortgage payments can hurt your credit significantly and affect your chances of approval for future loans. The answer to this question is therefore important to know and understand.
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Check Your Credit Reports And Scores Regularly
The first thing to do after a foreclosure is to get a copy of your credit report so you know where you stand credit-wise and can make note of any credit changes and errors moving forward. The easiest, and most above-board, way to get a copy of your report from all three bureaus is to request it from the federal governments official credit reporting website, annualcreditreport.com. This is free, and it is the only federal-sanctioned website where you can get a credit report every twelve months. Your credit reports will show your entire credit history including lines and amounts of credit, made and missed payments, etc.
Rebuild Your Credit After A Short Sale Or Foreclosure
A short sale or foreclosure doesnt cause permanent credit damage. Though it takes time, there are ways to improve your score and your future financial options.
According to Wahl, you should aim to make consistent monthly payments on any other debts.
Remind yourself that this is a long game and will take time, he said.
In the meantime, you can request help from the National Foundation for Credit Counseling or another nonprofit credit counseling agency. Counselors can walk you through your options for improving your credit and help you toward recovery from your short sale or foreclosure.
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How Does A Short Sale Affect Your Credit Score
A short sale is a type of settlement in which your mortgage lender lets you sell your home for less than you owe on your loan. Yet although a bank may agree to a short sale in order to avoid the expensive, time-consuming process of a foreclosure or potential bankruptcy filing, that doesnt mean that a short sale wont hurt your credit.
In terms of credit reporting and scoring, a short sale can potentially damage your credit just as much as a foreclosure. Yet if the short sale results in a $0 balance on your credit report, its impact might be slightly less severe than a foreclosure.
Building on the examples above, FICO reveals how the same three consumers might be impacted by a short sale versus a foreclosure.
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How Does A Foreclosure Work In Canada
Most people need to obtain a mortgage when they buy a new home because they canât afford to pay for a property on their own. To protect a bank or mortgage lender from a borrower defaulting on payments, mortgage contracts contain a clause that gives the lender the right to take possession of the home if payments are not made.
The foreclosure process usually involves a lender filing a Statement of Claim with a court. The mortgage holder has a set period of time in which to respond and try to provide a defence as to why they missed payments. If the court agrees with the financial institution providing the mortgage, your mortgage will officially be deemed in default and the lender can then ask for a foreclosure order. The lender will then evict the homeowners and take possession of the house, and will then sell the property to recuperate their investment.
A foreclosure is the most serious action a lender can take against a homeowner, and is usually reserved as a last resort because the process is expensive, lengthy and can involve the courts. Often the lender will try to work something out with the homeowner to make payments more manageable before initiating a foreclosure proceeding.
Note that a lender may initiate a power of sale on a property instead of a foreclosure, generally depending on which province or territory you live in. A power of sale is similar to a foreclosure but has less court involvement. Speak to your mortgage lender about the differences.
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How Much Does A Foreclosure Affect Your Credit Score
Unfortunately, foreclosure has a very damaging effect on your credit score. Estimates for the number of points you could lose vary among scoring models, but they reach up to 125 points and 160 points . 34
With that said, how much a foreclosure will impact your credit score largely depends on your original credit score. Negative items like foreclosures generally have a greater impact if your credit score was relatively high to begin with. Scores that are already somewhat damaged are less affected. 3
Why Choose Jerry E Smith To Help You With Your Foreclosure
Jerry E. Smith has dedicated his life to helping people get out from under the mountains of debt that have long impacted their lives and have prevented them from experiencing much of what life has to offer.
When you choose him to tackle your foreclosure issues, you can rest assured that he will explore every avenue to get you the relief you need.
Additionally, you can expect to be treated as a friend when bankruptcy lawyer Jerry E. Smith takes your case. You will never be made to feel anything less than an honored client.
Thanks to his CPA license, which he maintains in an active status, attorney Jerry E. Smith has insights into the financial workings that underlie foreclosures and uses his knowledge to better serve his clients.
If you are ready to take control of your foreclosure issue and start resolving it for good, please feel free to call our office at 917-8680. We would love to discuss your case discreetly and confidentially and help you find a solution. We offer evening and weekend appointments to help accommodate your schedule and can provide you with same-day services for any tax-related needs you might have.
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File A Dispute Directly With The Creditor
You can also contact the company that provided the information to the bureau in the first place, such as a bank or credit card issuer. Lenders are required to investigate and respond to all disputes.
Remember to include as much documentation as possible to support your claim. Including a copy of your report marking the error is also helpful.
The address you should mail the letter to is usually listed on your report, under the negative item youd like to dispute. You can also contact the lender directly to verify the mailing address and the documents you should include.
If the lender finds that it was mistaken or cannot prove that the debt actually belongs to you, it will notify the bureau and ask it to update your file.
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 . 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.
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Does Foreclosure Show Up On Your Credit Report
If a bank forecloses on your home, this will show up on your credit report. In addition, paying your mortgage late or missing payments will also appear on your credit report.
This is one reason why a foreclosure is so damaging to your . By the time the bank decides to foreclose, a borrower may have missed three, four, or more mortgage payments, causing serious damage to their credit score.