What about your credit?

Unfortunately, your credit score is ruined for the time being. A foreclosure stays on a credit report for seven years.

Here’s what one credit union says: “If you’ve had a bankruptcy or foreclosure in the past, it may affect your ability to get a new mortgage. Unless the bankruptcy or foreclosure was caused by situations beyond your control, we will generally require that two to four years have passed since the bankruptcy or foreclosure. It is also important that you’ve re-established an acceptable credit history with new loans or credit cards.”

Negative information can remain on your credit report for 7 years, except for bankruptcy. A bankruptcy can remain on your record for 10 years.

Example

Casey Serin is a 24 year old Sacramento man who attempted to make a living flipping homes. When he defaulted on his loan payments, his credit score plummeted. Serin wrote that his FICO credit score dropped for 726 to 490.

A bad credit score will impact your ability to buy or lease a new car, open up charge accounts or obtain new credit cards. It will prevent you from purchasing another home.

A bad score can affect your ability to rent a house or apartment. You may want to consider lining up housing before a Notice of Default is filed.

Repairing Your Credit

How do you go about repairing your credit? Hesitate before calling a credit repair organization. Credit repair agencies are most helpful when your credit report contains erroneous information that you need to dispute. You can’t dispute an actual foreclosure. To improve your credit you need to follow some common sense rules.

• Reduce your credit card debt.
• Cancel unused credit cards.
• Don’t apply for new credit cards unless you can pay the balance off quickly.
• Make your payments on time.

Review your credit history for erroneous information. Fill out dispute forms for any item you don’t agree with. You don’t need your score to be lower because of a credit reporting error.

If eliminating your debt by yourself seems like an impossible goal, you may want to consider reviewing your situation with a bankruptcy attorney. Prior to filing for bankruptcy, your bankruptcy attorney will put you in touch with credit counselors who will review your situation to see if bankruptcy can be averted. There are also companies that can help you eliminate your debt legally.