The Consequences of Foreclosure on your Credit Score

Foreclosure is one of the hardest routes you can take during the process of a negative mortgage. Its impacts can last on your credit for a lifetime. Understanding foreclosure and how it works is important. The process begins when you constantly miss three mortgage payments and receive a notification and letter from the lender that foreclosure will begin if you fail to meet any more payments.

It is a scary notion as no one ever wants to lose their home or be indebted with heaps of money that can never be paid back. The payments keep mounting, and there is no route other than going bankrupt. The whole situation is a dire one if you ever get into it.
But, whatever the circumstances may be, there is always a way out. One of the best options is selling your property during foreclosure. However, there are several elements you must take into account; these are further explained below.

What Does Foreclosure Mean?

Every state has different criteria for foreclosure. For states like Florida, the foreclosure process differs a lot. A foreclosure occurs when the borrower fails to make one or more payments. Even then, the process for foreclosure does not start immediately.

What happens after foreclosure?

If your home is in foreclosure, you might want to know what will happen next. Most homeowners tend to vacate the premises before or after the property is sold to someone else. This rule varies from state to state, and the options available everywhere are different. You can get options like getting an extension to vacate the premises or even the option of paying the due mortgage amount to get the house back.
consequences of foreclosure


Buying the house back is known as “redeeming” within the allotted time. This period is referred to as the redemption period, which is measured after the sale takes place. To re-avail the house, the owner would have to pay the total credit and any other charges, including interest. The redemption period also varies in every U.S. state.

Living as a Tenant

Another option you can avail of is staying in the property as a tenant. Some programs offered by lenders and investors allow foreclosed homeowners to rent the property they lived on even after losing it during foreclosure.

Staying Until You’re Evicted

The eviction process starts after you pass the redemption period and still haven’t cleared your former property. In this case, you will get a notice to evacuate the premises. If you fail to comply, authorities can have you removed from the property.
This process is different for every state and depends on the circumstances in each case. You might even receive a notice to quit before being evicted. This notice gives the foreclosed owner sufficient time to leave the place before the official eviction begins. Hence, it is best to vacate the property before receiving an eviction notice.

What can I legally take from my Foreclosed home?

To sum it up, you can legally take everything you brought. You have legal rights on some of the things in your former property, but it is best to know what you can legally take away from your old residence.
The rule is that you can take all your personal belongings with you, but not anything that comes with the house. The fixtures you can take depend on the state you reside in, and the foreclosure laws people adhere to.
The bank or lender has no interest in your personal belongings in the foreclosed property. Some of the things that are personal property are listed below:
You cannot take things that are referred to as fixtures. For example, a fixated stove is not a personal belonging and therefore cannot be removed from the foreclosed house. Some of the items defined as fixtures by most states are given below:
Removing fixtures can cause you to face legal issues that will have to be resolved separately. You could lose every opportunity to participate in different programs regarding foreclosure. Damaging any foreclosed property is considered a crime and may cause you to face serious legal consequences.

Foreclosure and its Effects on Your Credit

Foreclosure can affect you in several ways. It can downsize your credit score and seriously affect your chances of qualifying for credits or new loans in the future. Thus, it can have a lasting effect on your financial situation. Some of the methods you can use to make the best out of the situation are explained here.

How foreclosure affects you and your financial situation?

Your foreclosure status appears on your credit report almost a month after the lender initiates the foreclosure proceedings. This entry remains on your report for seven years, after which it is deleted from your report.

Thus, foreclosure has a damaging effect on your credit score. However, the number of points through which the depletion in your negative score is evaluated depends on many factors. The total score depends on your score before the foreclosure process and the negative points on your report.


Foreclosure happens in the fourth month after you miss four subsequent mortgage payments. Missing out on the payments lowers your credit score and leads to further negative scores. If you have other debts and are missing out on them as well, that will also have a negative impact on your credit report.

Can a Foreclosure be removed from your credit report?

A legal foreclosure status cannot vanish from your report before the given time is up; that is seven years from the first mortgage payment you missed. After seven years, the foreclosure status should be removed from your report automatically.

A foreclosure is a difficult phase to go through. But with time, everything falls back into place, and you can recover your report enough to be able to mortgage another house.

How will a Foreclosure Affect Your Future?

Buying or getting a house mortgaged after foreclosure is a hard road to take but not impossible. A borrower is most likely going to look for another mortgage after getting a foreclosure. Therefore, to qualify for a loan again, most lenders require a good score on your credit report. Some lenders even require a waiting period before considering a mortgage application.

Your best bet is to get a mortgage after a foreclosure through an FHA loan. A minimum of three years is required to get approved for this loan.

What is a Judicial Foreclosure?

Judicial foreclosure is referred to as the proceedings on a property that lacks the power of sale notion. This phase happens when the foreclosure proceedings have to be settled through the court.

Power of sale goes into the mortgage contract. It gives the power to the lender to resale the property if the mortgage debt amount remains unpaid. This way, both parties can avoid any legal proceedings. The majority of the states require the foreclosure to be judicial.

What is a Judicial Foreclosure

If the mortgage debt is regarded as default, the judicial court can take immediate action on the property to gather the funds to pay the lender. Nonjudicial foreclosure happens without the interference of the court during the foreclosure process.

Judicial foreclosure helps protect the equity that borrowers might still have in the foreclosed property. If, in any case, the auction fails to gather the mortgage amount for the lender, the borrower is held liable for all the remaining balance.

Final Takeaway

Paving your way out of foreclosure can put a lot of emotional and financial strain on a person. Avoiding foreclosure is the best way to remain free from such worries. However, if you find yourself surrounded by debts with no other option other than foreclosure, consider hiring an attorney or lawyer to help you through the legal process and save your time, energy, and money.