How do I prepare for the credit hit of a foreclosure?

[mattyd]

I'm starting the strategic default process as of Feb 1, 2012. Currently my wife an I have excellent credit (in the high 700s) and have never missed a payment, been late on any of them and have multiple car loans and mortgages that have been paid off over the years.

My question is: Is there anything we can do to soften the blow of the missed mortgage payments (on the first and second) that will ultimately end up in foreclosure?

Ideas we had were to:
1. Spread or credit card debt across multiple cards instead of having all on one.
2. Open a new card (amex?).

Our goal is to have access to credit that we can regularly use and payoff to revive our credit faster. But also, knowing we won't approve for much of anything over the next few years we'd have plenty of "backup" if we needed.

I've heard of credit cards lowering available credit once the missed mortgage payments start showing up. Is there any truth to that, even if we are making payment on time?

Any insight is greatly appreciated!

Matt

[OverandDone]

Yes it happened to me. A few non used cards canceled and limits lowered to the balance owed on others. Only one stayed the same. My plan is to just keep paying them on time and go on the hope that it will help raise my score in the future. I am several months into this and the first hit was after one month late and the rest all happened around 6.

[mattyd]

Did you try and call them to see if they'd reinstate your limits once you explained your situation? Seems like it might make sense to spread my cc debt lover a few of my cards so they don't take my limits to zero.

As you've made payments does it seem your CCs keep adjusting your limit down or was it a onetime thing?

Thanks

[OverandDone]

So far it has remained at the original levels that the cards were reduced to. But I am not paying big payments on them to pay them off because I want to maintain them and show a consistent payment history. I have not contacted them, my foreclosure is still in progress and I am just trying to keep my score up as much as possible. I am mid 600s and it has been there for several months.

[mattyd]

Good to know. Thanks for sharing.

[Jumbo in Oregon]

I am reading here about lot of people keeping tabs on movements on their credit score month by month. How are people doing this? Can you pull your credit every month for free? (as long as its on you)? I am on 5th month of strategic foreclosure and have been scared to pull my credit to see what number is next to mine as I have never been under 800 credit score. it would be great if there is a place that I can keep tabs on my credit score each month.

[OverandDone]

Creditkarma.com and creditsesame.com are both free services. One is transunion and other is experian score. Although they both say they are not the actual score they are pretty close.

[mattyd]

My financial/mortgage advisor sent me to this site www.annualcreditreport.com. They allow you to pull your credit once a year for free. I haven't used it yet but plan to after being half way thru the process. I paid for my last report thru Equifax and I think it was around $14.

[Ready2Run]

If you go to Free FICO Credit Score + Check Your Credit Report Online | myFICO you can get your FICO (Equifax) credit score for free with a 10 day trial to Score Watch. Score Watch will monitor your credit report and report changes based on alerts that you set. Each alert also gives you a credit score. With Score Watch you can get monthly or better credit scores. If you continue the trial you also get two credit reports per year.

It costs you if you continue or forget to cancel the trial, but it is your Equifax report and true FICO credit score.

[Martinique]

I am new on this great website and trying to educate myself. This is my first post.

My wife and I have an 800+ Fico score but we're starting a short sale process on our house. How much of a credit hit can we expect? We have no debt and always pay our bills on time. We've agonized over this decision but I think it's the best choice for us. Does the amount of the debt being "forgiven" (we hope) affect the credit score? Is a smaller debt better than a large one in terms of our credit rating ?
Thank you for any input, advice and strategies you may have.

[No_Kidding]

I see that you are in CA. So, first lien won't have any COD income in case of FC. Since first lien is non-recourse. I am not sure if you have 2nd lien. I am not sure if 2nd lien will generate COD depending on recourse or otherwise.

I am new on this great website and trying to educate myself. This is my first post.

My wife and I have an 800+ Fico score but we're starting a short sale process on our house. How much of a credit hit can we expect? We have no debt and always pay our bills on time. We've agonized over this decision but I think it's the best choice for us. Does the amount of the debt being "forgiven" (we hope) affect the credit score? Is a smaller debt better than a large one in terms of our credit rating ?
Thank you for any input, advice and strategies you may have.

[No_Kidding]

Sorry, post# 11 was meant for another thread. I don't know how it ended up here. IF Moderator could, please delete posts 11 and 12.

[OverandDone]

Ok here I am almost 7 months after the foreclosure is final and gradually rising now to just under 700. Each month it goes up a point or two.

[American_Nightmare_in_GA]

Ok here I am almost 7 months after the foreclosure is final and gradually rising now to just under 700. Each month it goes up a point or two.

OverandDone, this is great to hear, just 7 months out! When was the major drop: 30 days, 60 days, 90 days late? Then it stabilized? The gradual climb....did it not start until after the foreclosure was final? Thank you!