How to Remove a Foreclosure from Your Credit Report
December 23, 2019
Removing a foreclosure from your credit report requires time and patience. You can dispute it, but you’ll need the right documentation to demonstrate that it doesn’t belong on your credit report.
You may be able to remove a foreclosure from your credit report if:
- The foreclosure is more than seven years old
- The lender is no longer in business
- You have a voluntary dismissal
- There is a lack of available records
What Can I Do to Remove an Inaccurate Foreclosure?
Here’s what you can do to ensure you have the best chances of removing an inaccurate foreclosure from your credit report.
Step 1: Find Errors on Your Credit Report Listing
First, you’ll need to gather your credit reports from Equifax, Experian and TransUnion. You’re entitled to a free copy of each report every year from AnnualCreditReport.com. It’s crucial to check all three since your scores and information will be slightly different for each.
Make sure to look for:
- The foreclosure balance
- Any dates associated with the account
- The account number
- The name of the lender
If you find an error, contact the credit bureaus directly to start a credit dispute. You should identify what items you are challenging, explain why you’re challenging the information, provide proof and request that the item is removed or corrected. The Federal Trade Commission has a sample letter you can use to get started.
The bureaus must investigate within 30 days. They have five days after the investigation is complete to report the results to you, according to the Fair Credit Reporting Act (FCRA), they are able to extend this time in some cases.
Step 2: Write to the Lender
In addition to contacting the bureaus, you should also contact your lender and inform them about the inaccuracies. Include the same level of detail as you did in your letters to the credit bureaus. Lenders are also obligated to investigate disputes.
Step 3: Consider Professional Help
A credit repair firm, like Lexington Law, could be your best resource for getting a foreclosure removed from your credit report if you’re unable or don’t want to dedicate the amount of time and effort it may take to complete the process.
It’s helpful to have someone on your side who regularly works on cases like yours and is familiar with the intricate details related to the process. For example, credit repair companies are more likely to know what types of documentation are needed to win a dispute.
How Does a Foreclosure Affect My Credit Score?
A foreclosure can drop your credit score by up to 160 points.
Foreclosures mean you were late on your payments before the foreclosure, which leads lenders to think you might not pay them back. Thankfully, the negative impact of a foreclosure becomes less severe on your credit report as time goes by.
How Long Does it Take for a Foreclosure to Come Off Your Credit Report?
Foreclosures can typically stay on credit reports for more than seven years. Seven years is a long time, and a foreclosure can impact your ability to find another place to live. Not only that, but a foreclosure can have a drastic effect on your credit.
How Does a Short Sale Affect My Credit Score?
A short sale is your last option before your home finally goes into foreclosure, and it can help you in the long run. You will need permission from your lender to sell your home for less than you owe, which the lender may or may not grant.
The way a short sale appears on your credit report depends largely on how the bank or lender decides to report the short sale. If it’s reported as paid, then you may not see a change in your credit score at all.
How Long Does it Take for a Short Sale to Come Off Your Credit Report?
Short sales are treated similarly to foreclosures, and can also stay on credit reports for seven years. However, it won’t appear on your credit report as a “short sale.” Instead, your mortgage may be reported as “settled.”
Can I Buy a House With Foreclosure on My Credit?
Yes, you can still buy a house even with a foreclosure on your credit reports, although it will be challenging. It’s also likely that you won't be able to buy a house immediately after a foreclosure. In some cases, you have to wait a few years before you can qualify for another mortgage loan.
In this case, it may be beneficial to work with a mortgage professional who can help you explore other options, like government-supported loans.
Having a foreclosure can also make buying a house more expensive. This is because lenders view you as a higher risk and are likely to charge you higher interest rates and fees. However, you can still get a mortgage with bad credit if you’re willing to pay higher fees and a down payment.
Removing Foreclosures With a Credit Repair Company
Like we mentioned, there are a lot of benefits to using a credit repair company to remove a foreclosure from your credit report. You can save time and money, and you may also have a higher chance of getting your foreclosure removed. If you’d like to get started, sign up for a free credit repair consultation to see how Lexington Law can help.