Foreclosures have a tremendous negative impact on credit scores, but that impact does not last forever. While the immediate effect of a foreclosure is a 200 to 300 point decrease in reported scores, time and a little effort put into rebuilding finances can restore credit to reasonable levels. Time passes, and so do negative credit entries.
Foreclosures only stay on credit records for seven years. However, if everything else about the borrower’s credit is in good order, it can only take a couple of years for credit to begin to rebound. The important things are to pay bills on time, have only a few credit cards with relatively low balances and always pay at least the minimum on those cards.
Five years after a foreclosure, even the Federal Housing Administration (FHA) may agree to insure a home mortgage, if the borrower has exhibited financial responsibility in the interim. Going through foreclosure is not a pleasant experience, but once the proceedings are finalized, things can begin to improve.
By paying attention to financial obligations and being particularly diligent about credit cards, borrowers can win their way back to credit-worthy status in only a few years. Of course, every situation is different. Someone with questions about rebuilding credit should consult an expert on the subject, like the experienced professionals at Lexington Law, who can offer advice on all aspect of the process.