Foreclosure can happen to pretty much anyone. All it takes is a financial emergency and you get behind on your mortgage. If you are facing foreclosure and see no way to stop it, you may wonder how this is going to affect your credit. To begin with, creditors do not look favorable on foreclosures, according to Financial Samurai. It shows you did not live up to end of the contract with your mortgage lender.
The action will cause a huge reduction in your credit score. Surprisingly, the better your score, the more you will be affected. For example, if your score is 780, then you can expect a drop of up to 160 points once the foreclosure is complete, but if your score is 680, you will probably lose up to only 105 points.
The actual number of points your credit score falls is based on how late you are on your payment. If the foreclosure has not been completed, your score will reflect a deduction for being 30 days or 90 days late. So, there will be a drop in your score initially as well. Then, you have the additional drop due to the completion of the process.
In total, your score can drop up to 170 points, which is huge. A bankruptcy, for example, will drop your score 130 to 240 points. So, a foreclosure is almost as bad, and in some cases, worse than a foreclosure. It is well worth taking time to consider you score before you make a final decision on how to handle your finance. This information is for education and not legal advice.
