Question:

How does a foreclosure affect my credit?

Answer:

Foreclosure affects your credit negatively, but the Fair Isaac Co won't tell how exactly that happens. All you may know is that foreclosure affects your credit score with as much as 200 points, if it is recent, and much less if it is at least three years away. Foreclosure can be removed from your credit report if it occurred 7-10 years ago, according to your state law.

Your credit will certainly be affected by foreclosure considerably, but it is not true that you can't buy a house after foreclosure, even with severely reduced score. In most cases, you will get bad rates or will be required to pay huge down payment. However, foreclosure effect on your credit can be counterbalanced.

Pull up your credit reports from the three CRCs (credit reporting agencies) and check every single item you have. Do not touch accounts and items more than 5 years old. Rather, concentrate on items for the last three years. Credit bureaus make a lot of mistakes, so disputing any erroneous items will help improve quicker your credit score after foreclosure affected it so bad.

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