According to ATTOM reported default notices, scheduled auctions, and bank repossessions — were written on 324,237 U.S. properties in 2022, up 115 percent from 2021. Foreclosures can have a significant impact on your credit score and can stay on your credit report for up to seven years, making it difficult to obtain loans, credit cards, or even a job.
However, there are ways to remove a foreclosure from your credit report under certain circumstances, and in this article, we will provide a step-by-step guide on how to do so.
What is foreclosure?
Foreclosure refers to the legal process by which a lender or mortgage holder takes possession of a property from a borrower who has defaulted on their mortgage payments. In other words, it’s the process of a lender taking ownership of a property due to the borrower’s inability to make the required mortgage payments.
It typically begins when a borrower fails to make several mortgage payments, and the lender files a notice of default. This notice informs the borrower that they have time to make up the missed payments or the lender will initiate foreclosure proceedings. If the borrower cannot make up the missed payments, the lender can take possession of the property and sell it to recoup their losses.
How to avoid getting a foreclosure
Talk with your lender: If you are having trouble making your mortgage payments, the first step is to reach out to your lender and explain your situation. Most lenders are willing to work with borrowers to find a solution that will work for both of you, such as a loan modification or a repayment plan.
Seek financial counseling: Consider working with a financial counselor who can help you assess your financial situation and develop a plan to avoid foreclosure.
Explore government programs: Several government programs are available to help struggling home owners to make their mortgage payments, such as the Home Affordable Modification Program (HAMP).
Consider a short sale: If you cannot keep up with your mortgage payments and you owe more than it is worth, you may be able to sell the property for less than you owe and avoid foreclosure.
Sell the property: If you have equity in your home and cannot make your mortgage payments, you can sell the property and use the proceeds to pay off your mortgage.
Look into bankruptcy: Filing for bankruptcy can temporarily pause proceedings and give you time to catch up on missed mortgage payments. However, consulting with a bankruptcy attorney before taking this step is essential, as it can have long-term consequences for your credit score and financial future.
Remember, the earlier you address your issues head on, the more options you’ll have.
What if it’s not accurate?
If there is a foreclosure reporting on your credit report that isn’t yours or reporting inaccurately, here are the steps you need to take:
Get a copy of your credit report. You can get a free copy at Annualcreditreport.com
1. You want to look at every detail. Things such as the dates, account numbers, balances, or anything at all that doesn’t look accurate.
2. Open a dispute with each of the credit bureaus. Make sure to include any information relevant to your dispute!
You can dispute online with each of the credit bureaus here.
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374
P.O. Box 4500
Allen, TX 75013
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016
Once you have a dispute with the credit bureaus, according to the Fair Credit Reporting Act (FCRA) they have 30 days to verify the information.
Contact your lender
If the credit bureaus don’t remove the foreclosure from your credit report, your next approach should be to reach out to the lender. All lenders are obligated to investigate disputes. Write the same detailed letter you did to the credit bureaus and ask the lender to remove the entry from your credit report due to inaccuracies. Make sure to give them a 30-45 day deadline to do so.
If they can’t verify the information or don’t want to spend the time verifying, they might choose to simply remove the entry.
Hire a legitimate credit repair company
In order to remove an inaccurate foreclosure from your credit report, the first step is filing a dispute with all three credit bureaus. But remember, the bureaus have the right to dismiss any disputes they consider frivolous. So it’s important to be clear, point out the errors, and how you’d like them corrected, and you must include any and all proof you have.
If you find the process is more than you want to take on, you can always seek the help of a legitimate credit repair company. Most credit repair companies have experience dealing with credit bureaus and know how to navigate their processes to increase your chances of success. We have an article here about choosing the best credit repair companies.
How long does a foreclosure stay on your credit report?
Seven years is the length of time a foreclosure will stay on your credit report. The time starts from the date of your first missed payment.
How much does a foreclosure drop your credit score?
A foreclosure can have a big impact on your credit score. The exact amount that it will drop can vary depending on several factors, including your overall credit history.
Can I get a foreclosure removed?
If it’s accurate and verified as such, you cannot have it removed before the seven-year period.
Need Help Disputing a Foreclosure?
Schedule a free consultation and a credit repair coach will be happy to help.