What Does Foreclosure Do to Your Credit?
Allowing your lender to foreclose on your home’s mortgage will have an adverse and lasting impact on your credit rating.
If you have received notice from the bank or their mortgage servicer that they intend to file a foreclosure lawsuit against you, you only have a short time to file a response and avoid a summary judgment against you. In Ohio, you should immediately contact a foreclosure defense attorney from Amourgis & Associates, Attorneys at Law, to take action to save your home and your credit rating.
How Foreclosure Affects Your Credit Score
A mortgage lender will foreclose on your home and sell it to recoup their losses if you fail to make the required mortgage payments on your home loan.
Does foreclosure affect your credit score? The answer is yes. Foreclosure is considered a serious negative event in your credit history, second only to bankruptcy. A foreclosure can lower your credit score by 100 points or more.
How badly a foreclosure affects your credit score depends on your credit history. Ironically, foreclosure has a heavier impact on high credit scores, because higher scores can be lowered more than already-low scores can be reduced.
How Long Can a Foreclosure Stay on Your Credit Report?
A foreclosure will remain as a derogatory remark on your credit report for up to seven years from the date of the first missed payment that led to the foreclosure.
Can You Repair Credit After a Foreclosure?
You cannot remove a foreclosure from your credit report, but you can repair your credit after a foreclosure. Building good credit requires establishing a record of good financial habits over time. Among the steps to take are:
- Pay bills on time. Your payment history has the most significant impact on your credit score. Timely payments on loans, credit cards, rent, utilities, etc., are good for your credit rating.
- Demonstrate responsible use of credit. Buying with credit cards and making monthly payments is a good way to create a good credit record. The best practice is to pay the total credit card balance each month. Credit card interest is costly, and as you use up your credit line, your credit rating falls. If you must carry a balance, pay as much on it as possible — beyond the minimum — and on time.
- Pay down existing credit card balances. If you already have multiple credit card balances, focus on paying off the card with the highest interest rate while also making at least the minimum payments on other cards. Consider obtaining a balance transfer card to establish a single payment at a lower interest rate or a secured credit card with a low credit limit to improve your score.
Is There a Way to Avoid Foreclosure in Ohio?
Depending on the facts of your case, there may be multiple options available to you to stop the foreclosure process in Ohio. Some potential strategies include:
- Negotiating a loan modification, which could lower the interest rate in exchange for lengthening the term of the mortgage
- Redeeming the loan by paying your mortgage balance, if the funds are available.
- Filing for bankruptcy, which immediately halts all legal action against you by creditors, including foreclosure lawsuits. Ohio’s bankruptcy exemptions also protect the debtor’s home from foreclosure in most cases.
Talk to an Ohio Foreclosure Attorney Today
If you have missed mortgage payments and received warnings of a foreclosure, you need to act quickly to protect your ability to remain in your home. An Ohio foreclosure defense attorney at Amourgis & Associates, Attorneys at Law, can advise you of your options when facing foreclosure and aggressively defend your rights.
Call or reach out online today to schedule a free legal consultation at one of our seven locations throughout Ohio.
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At Amourgis & Associates, Attorneys at Law, we only represent consumers. We fight for regular people who have been seriously hurt in accidents. We fight for people who are being crushed by overwhelming debt and need a fresh start. We fight for individuals and families. Never businesses. Never insurance companies. We are loyal to the consumer.
