How does a foreclosure affect my credit score?
The effects of foreclosure on your credit can be very negative. It will usually stay on your credit for at least 7-10 years. You can ask the lender for creative alternatives to foreclosure and they will see if you qualify for any of their programs. If your house has some equity and you have to sell it you can ask the lender about a " deed in lieu" program. This is where the lender will agree to sign a deed for your house in return for you walking away and giving up any equity to them. You can also ask about a " short sale" program. This is where the lender can agree to accept a less amount than what is owed to them for your property. They can agree to do this because the costs associated with foreclosure are very high. You can also ask about forbearance and other repayment programs.
Overall foreclosure is detrimental to your credit. In fact, in many ways it is easier to re-establish your credit from a bankruptcy than a foreclosure. In a bankruptcy your FICO is often frozen until you complete the bankruptcy. That means if you had a FICO score of 675 before bankruptcy you would have a FICO score of 675 when you came out of bankruptcy. This isn't the case with foreclosure. Your FICO gets pinged everytime another payment is missed. You are at the mercy of the foreclosure sale so you can have several missed mortgage payments show up on your credit report. This is very difficult to get removed since it isn't an error like many other items that are falsely reported to your credit report. This is also called a "hard return" because it doesn't get removed like inquiries or collections older than 12 months. You should get free credit counseling for more information.