Home Foreclosure & Credit Rating – How Does Foreclosure Effects Your FICO Score?

A home foreclosure is the worst thing that can happen to your credit report and affect your credit rating badly. Though it appears in your credit report but it has been seen that it stays in your account for 7 years and ruins your FICO score. Home foreclosure worst affect is on your FICO score. It can decrease your score from 125-175 points that is actually very bad for your financial status. For eg: if your FICO score is 700; it would become 500 or 525 after foreclosure. This would also lower down your status in the eyes of your lender.

Here are some problems that a homeowner may face after home foreclosure and its affect on the credit rating:

* A home foreclosure would surely drop down your FICO score and you will face difficulties in getting another loan or credit card from the lender. Possibilities are that your lender will charge a higher rate on your account and can also deny the loan or any other facility after seeing a downfall in your credit rating.

* Lenders or financial institutions will take advantage of your poor credit rating and will charge a very high interest rate on the loan that you have applied for. You would not be able to get the actual genuine interest rate for any loan if there is a home foreclosure appearing in your report because of which your credit rating has also become down.

* A home foreclosure can stay in your records for 5 years to 7 years even if you have paid all the dues in the books. This is because sometimes lenders forget to update your report and sometimes it is the data entering error. Reason could be any but your FICO score get badly hit due to all this.

You can get best rates and other advantages only if your FICO score is high. But if it is counted a low, there are many ways that the bank can use to torture you and charge extra money from you.

Source by Emma Becker

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