The fact that a foreclosure is prompted by circumstances making it difficult to make loan repayments, it will pose negative influences to your credit worthiness and your ability to acquire new mortgage regardless of whether it is a voluntary or an involuntary foreclosure. However it does not taint your credit report forever as it lasts for seven years on your credit report. You can expect to lose 100 points as a result of a foreclosure but if you have a low credit score you are not likely to observe a huge impact as the one you would if you had a very high credit score prior to the foreclosure. Before considering a foreclosure evaluate other options with lesser effects on your credit ranking such as loan modifications so as avoid the negative impacts of a foreclosure.

The effects of foreclosure on your credit can be looked in the following headlines:

Effects on your credit score

All lenders’ first step when you are seeking for finances will be to look at your credit scores to determine the terms with which to offer you the credit facility you are seeking. Therefore considering that foreclosure decreases your credit score it will limit your ability of obtaining favorable lower interest rates on any form of credit in the future and also may prevent you from accessing credit totally altogether in some cases.

Effects on the ability to obtain future credit

After a foreclosure you can obtain a mortgage as soon as after one year from the Federal Housing Administration backed loans, if you satisfy a certain criterion and maintain an acceptable credit during that period. In some instances it will take you up to 7 years after foreclosure conclusion before qualifying for another mortgage.

Effects on getting other forms of credit

Foreclosure reduces your credit worthiness by lowering your credit score. Nonetheless it is difficult to foretell its impacts on acquiring other form of credit such as car loans or credit cards in terms of their availability and the cost of obtaining them. This complexity can be contributed by the fact that there exists corporations that serve clients with low credit scores and thus will charge higher interest rates.

Channel of mitigating the impacts of foreclosure on your credit

Even though it is reality that foreclosure stains your credit report and will last for the next seven years, the effects of a foreclosure can be reduced by remaining current with your other debts repayments which will see to it that your credit score spring back within 2 years.

Avoid credit repair firms advertising that they can assist fix your credit subsequent to a foreclosure because what they claim to do, you can do for yourself such as disputing the information on the credit report due to errors or outdated information.  Considering that credit reports cannot be wiped entirely if missed payments have occurred in the course of the past seven years after foreclosure, they are a swindle.