How Long Does a Foreclosure Affect Your Credit?

I am constantly asked  how long does a foreclosure affect your credit.   What can I do to get my credit back and buy a San Diego North County home?  The article below deals with foreclosures and a “notice of foreclosure.”

Having a foreclosure is not the death knell to your credit score, but it does make a big hit.  How long you have to wait to buy that San Diego North County home depends on the reason for the foreclosure and other circumstances. The general rule is that a foreclosure stays on your credit report for seven years.   A foreclosure is considered a major derogatory item.  Your credit score will start to suffer as soon as a “notice of foreclosure” is filed on your property.  The damage a foreclosure makes can vary, but it can be as much as 200 points.

Rebuilding After a Foreclosure

After your foreclosure, your priority has to be rebuilding your credit.  You have some time because Freddie Mac and Fannie Mae have strict rules on how long it will take before you are eligible for another North County home loan.  For example, at Fannie Mae, if you have a foreclosure with extenuating circumstances, such as a job loss, medical issues, or a divorce, you must wait about three years.   Same is true at Freddie Mac.  If you do not have extenuating circumstances, Freddie Mac, says the wait is five years.  If your home foreclosure was caused solely from your own financial mismanagement, you must wait seven years before you can buy that North County home.

Tips on Improving the Odds

If  you have been through a foreclosure there are things you can do to make lenders want to take a chance on you again:

  • Save money for your downpayment. 
  • Clean up your credit score by paying off or paying down your debts.
  • Establish a record on “on time payments”
  • Get your credit score as high as possible
  • Show stability in you job
  • Monitor your credit report.  Make sure paid off lines of credit and loans show closed.
  • Talk to a good lender

At Prudential California Realty, I work with some of the best lenders in the business.  My partner at HomeServices Lending, Curtis Fox, would be glad to take a free look at your credit and see what we could do to get  you into your next San Diego North County home sooner.  Contact Gary Harmon, your North County real estate expert.

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