We all know that foreclosure and related debts can seriously affect your credit score. And with your credit score being so low, getting a loan will be even harder – just when you might need to have one.
But how much does foreclosure actually affect your score? Here’s a general range of how the steps that lead to foreclosure can whittle down your credit score:
Minus 50 – 100 points – If you’re thirty days late on your payment
Minus 60 – 140 points – If you reach 90 days on your late payments
Minus 80 – 160 points – If you foreclose or go through a short sale or deed-in-lieu action
Minus 120 – 240 points – Once you declare bankruptcy
The wide range takes into account various factors, from how many other debts a person has, to how they have handled other credit and debt situations in the past. In addition, the higher your original score is, the more your credit score can fall.
The good news
Many analysts admit that the steep drop in your credit score is an unavoidable consequence of late payments or foreclosure. After all, you did fail to make the payments. However, it is also generally agreed on that it’s better to take the hit as early as possible, so you can begin to make the climb back to a normal credit score. This can take up to a decade after a bad foreclosure, but at least your credit score won’t go any lower. The important thing is that you address your debt and credit score immediately, so that it will be easier for you to get a loan in the future.
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