How Can Forecloser Affect Your Credit?
Trying to keep your credit score up is one of the most important things you can do, as it affects your financial life in so many ways. Avoiding disasters like bankruptcy and foreclosure are critical, as they can have devastating effects on your credit rating. When it comes to going through foreclosure, your credit score will be hit and it will be hard to get another mortgage.
Getting a Mortgage
After you go through foreclosure, the credit damage can make it difficult to get another mortgage. You have to wait a minimum amount of time before you can be eligible for a traditional mortgage again. Fannie Mae helps set the standards for the mortgage lending industry and according to its rules, you have to wait at least five years before you can get another mortgage. The exception to this rule is if you get a mortgage that is insured by the Federal Housing Administration, or FHA. In this case, you only have to wait three years.
Other Considerations
When you go through foreclosure, it can also hurt your credit in other ways. The damage of 85 to 160 points comes from the actual foreclosure itself, but it does not take into account the late payments leading up to the foreclosure. In some cases, you might miss several months of payments before the foreclosure goes into effect. If you are 90 days late on a payment, it can hurt your score by as much as 135 points, according to CNN Money.
