Posted On: September 27, 2019
Recent research posted by LendingTree shows that after a year of foreclosure, 7% of the ex-owners have credit scores over 680, and 2% are above 740. However, all credit scores increased by almost 10 points each year. So, just because you get foreclosed, does not mean your credit score will be ruined.
In the United States, more than 600,000 houses were foreclosed on, which is the lowest number since the 2008 financial crisis. So, since our housing market has become so strong, we could be leaving foreclosure behind us (in numbers).
To be specific, a foreclosure does damage your credit score, but it doesn’t have to be like that forever. Foreclosures disappear from your score after seven years, but you can do other things to increase your score sooner. Now for the hurtful news: a foreclosure can damage a score by 150 points or more. As long as someone who gets foreclosed stays on track, however, they can still see their score go up in just the first year alone.
LendingTree said this in their report:
“The foreclosure dominates your credit score in the first two years after. This is evident from interest rates not correlating to credit scores when borrowing two years after foreclosure. However, when borrowing after three years or more, the expected pattern emerges with higher credit score borrowers paying lower interest rates.”
A foreclosure can also make your premium higher. Most homebuyers who were foreclosed on saw an increase of .3% from the average borrower.
At SETCO, we want you to know that even if you’ve faced a foreclosure, you can still buy again. We also want you to know we offer the safest closing process in the panhandle and if you ever have any questions or want to contact us, please do!