I have a friend who is going through a foreclosure right now and he's very worried about his credit scores. I've already told him his credit scores are going to take a huge hit and many years to recover. But he's looking for more specifics or real life examples. Have any of you gone through a foreclosure before and can respond with how it affected your credit and for how long? Thanks!
My lender started foreclosure proceedings against me in July 2009... I had stopped mortgage payments in April of that year and my CS was 744. I was served with a summons in July (lis pendens) CS was 651. At this point my CC banks started CL chasing... and except for my mortgage I had no late payments. Decided on a short sale and closed in Feb 2010. My score was about 615 as any cards I had balances on had maxed out limits because of the CL chasing. Five months prior to the short sale, I stopped making payments on my HELOC. CS hovered around the low 600s. By that time I had a few cards with 25k to 35k limits that were reduced to $300 or $400. Had to file CH7 in June 2010, after discharge in August my score was 620. Of course by that time I had 10 IIBK remarks on my CH and no open accounts. Stayed that way until December 2010 when I was approved for my first CC. CS for a car loan in Feb 2011 was 641. My CS has been as high as 710 since then. I've read that you can qualify for a mortgage quicker with a short sale and BK on your CR rather than a foreclosure.
Thanks so much for sharing mijd. That was quite a credit journey you went through back in 2009-2011. Huge props to you for getting your credit scores back into the 700s. I'm curious what the first credit card was that you got approved for back in Dec. 2010? And do you still have that same credit card today? And I would definitely agree with you that you can qualify for a mortgage more quickly after a short sale or BK than with a foreclosure on your credit reports.
Joshua, It is a First National Bank Legacy. I still have the card today in spite of the fact it has a 29.9% apr and $75 AF. Unfortunately I burned a few major banks and have managed to get back in with them with the exception of Chase and Discover. I never really had a need for large CLs in the past especially as my total was well over my yearly income. Most CLIs for me in the past were not requested. Even today having several Visas and MC's I only carry balances (or try to) on store cards with promotional offers. I have several Visa's with CB rewards that I use for everyday. Thanks for the KUDOs but I take full responsibility for my CH7 and was thankful for a new start. I consider myself fortunate that the IRS had income tax forgiveness on the deficiency between what my condo sold for and the mortgage balance. Otherwise I would have had to pay income tax on this amount.
I've actually never heard that much about the First National Bank Legacy card. Have you been pretty happy with the card, in spite of its hefty annual fee and high interest rate? I'm just curious why you've decided to hold onto it even though you've made some considerable progress with your credit scores.
I did a short sale in March 2010. My credit did take a hit but did recover after 2 years. I was able to get a new mortgage 4 years later. In Michigan, you are able to get mortgages 2 years after the short sale. Some see a short sale, died in lieu, as a foreclosure. I bit the bullet for 4 years and now its over with. I know it sucks at first but there is a light at the end of the tunnel. Also, I was fortunate to have the short sale on a VA loan where the difference didn't need to get paid back.
Thanks for sharing Jeff. Happy to hear that your credit fully recovered within 2 years- I'll share that info. with him for sure. Great for you that you didn't have to pony up and pay the deficiency balance as well!
Joshua, the 1st National Bank Legacy for me has been a credit rebuilder card. I had a few CLIs with the card, one requested, the others were offered. The pros besides a credit rebuilder were no set up fees and no AF fees divided and charged to the acct monthly. However, as I've stated, the APR is high and there is a $75. AF. Don't know why I've held onto the card.... I guess as it's helps my credit utilization. I tend to take advantage of store cards with no interest promotions. This affects my utilization and a PIF Legacy CC helps balance it out.
Jeffalan49, you're fortunate that you were exempt from a deficiency judgment. That was my #1 fear going into my short sale and my HELOC bank did start collections prior to my short sale. The 1st mortgage agreed in the short sale not to seek a DJ and as the short sale closed before I filed for BK, I was sent a 1099C. As far as my CS is concerned, last month the 1st mortgage trade line fell off my TU and EQ CRs. My scores hardly reacted at all, maybe I gained a point or two. Same for my partner's CRs who was co-purchaser on the mortgage. This month the HELOC fell off both of our EQ CRs. Again my score hardly budged, however my partner's EQ score jumped 44 points. He did not file BK though. I'm kind of anxious as to see what happens with his TU CS.
Those 0% interest store credit cards can certainly be enticing, can't they? Most people don't even think about how they might affect their credit utilization ratios and negatively impact credit scores, so I'm glad to hear that's something you're actually watching out for!
Joshua, Hit another milestone (well in my opinion) in April and then again last week. TU and EQ removed my 1st mortgage trade from my reports in April, then my Heloc this month. Actually it's been 6 years so it actually was a early removal and since I did BK it boosted my score by a point or 2. Heck, I'll take it!!! Now my partner was a different story. When the 1st mortgage was removed, his score was like mine... only a 1 or 2 point boost. Now when the Heloc was removed this month, his CS with TU went up 42 whopping points... EQ 44. Don't know yet about Experian. The Heloc was showing as a Charge off/Bad Dept on his report... mine showed a IIBK. Quite the difference!
Wow, that is quite the difference! Very interesting. What are your partners FICO scores now? Have they fully recovered to where they were prior to the short sale?
