How long does foreclosure stay on your credit?

Q. Dear; I have been struggling to pay my mortgage for well over a year and I am now considering walking away from my property. Things have not worked out as planned and I am planning to find a rental in the near future. From what I have researched, my credit score is most likely going to go down the drain and I would hate having this horrible mark on my credit history forever. So I am wondering, how long does foreclosure stay on your credit?

A. Do not feel bad about walking away, you are definitely not alone. There are thousands of other borrowers around the nation who are currently walking away from their mortgage due to financial struggles. Though this is a dreaded event and may take a tole on your financial standings for years to come, there are ways to improve your credit score over time. Think about what you can do to better your standings after this event, and not just how long it will be on your report.

A foreclosure is one of the worst things you can have on your credit history, other than a bankruptcy. Not only will this have a dramatic affect on your current score, but a foreclosure will remain on your credit report up to seven years from the date of sale.

After the foreclosure takes place it may be hard to secure any type of financing without being considered a financial risk. Lending institutions will likely charge borrowers extra high interest rates if you are looked at as a potential danger. While you should have no problem finding a rental after this event takes place, obtaining any type of financing in the near future is probably out of the question. However, even though a foreclosure will remain on your report for seven years, you should be able to rebuild your score in much less time.

I'm not sure if you are behind on your payments or not, but foreclosure seems to be taking quite some time in most states (sometimes up to a year or two) and during this time you may be able to save up a good amount of money. Banks and courts alike are extremely backlogged with foreclosures. Personally I would take advantage of this situation and save up as much money ass possible until you are forced to move. Keep your head up and always try to look at the bright side of things!

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My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications. I currently live in Carlsbad, California with my beautiful wife and children.
  • Tim Rea

    Really, this is your only advise (Save as much money as you can).
    I similar thing happened to me. First I locked in the interest rate of every loan I intended to pay. And yes, I wanted to pay off as much as I could, because it was the right thing to do.

    Yes, I saved as much money as I could and at first kept it in cash form in my mattress account. I later put in in the bank.

    If you know you are going financially down, STOP paying the debt that is bringing you down immediately. While you are not paying that debt use the money as a cash reserve. You are going to need it. After you have enough that you feel is comfortable (should be enough to last about 2 years), start paying down the debts that you plan on paying.

    I have 4 principles of finance that have always served me well in good time and in bad. They need to always be prioritized in order for them to work properly.

    1. Watch your spending. Do you best to reduce your spending and live below your means (income). Some people like keeping a journal. What ever works.

    2. Watch your interest rates. Know what compound interest is, the effect of frequency of compound interest, and what it does to money. Believe me the banks know this and use it to their advantage. Most people think of interest rates as either savings accounts. ALSO, think of how the financial institutions use this concept against you, to their advantage in interest rates on credit cards and loans to you.

    3. Watch you income. This step has to be after step 1, and before step 4. If you don’t watch your spending in step 1, when you increase your income, you’ll just spend more and get nowhere. Don’t try to reduce you income to avoid taxes. I won’t bore you with the logic, but it really is ridiculous to avoid paying $20.00, by not earning $100.00.

    4. Watch your taxes. The government will slowly bleed you dry if you don’t take advantage of tax shelters. If you can reduce you taxes within the framework that the government allows, do it.

  • Jan Vuiller

    My son has an 80/20 loan with 2 different lenders. The 20% loan has a balloon payment of the same amount he borrowed at the end of 15 years. He is 5 years into the loan. He is struggling to make his payments. He would like to refi but he is upside down owing 219K and the house is only worth 70K. What do you suggest? Is there any help or should he walk away and take the hit on his credit?

  • Paul

    We foreclosed on our home about a year and a half ago, and other than the fact that it put a serious hit on our credit score and it now looks like we will be renters for some time, it did allow us to get completely out of debt in every other aspect of our lives. We have been renting a very comparable property for roughly 60% of what our mortgage was and are living much more comfortably financially now. Not that I recommend anyone default on a home loan but if you have no other options at least there is a silver lining.

  • Dan

    Jan Vuiller,


    He should stop paying immediately. The value will not even come close to recovering by the time his balloon hits and he will end up losing the house anyway because no one will refi a largely upside down home. I was in the same boat and 1 year after foreclosure my FICO is 710.

  • hassan mir

    in 2008 i lost my job i had bad creid i cant pay my bill or my house payment i did not find any job in 6 mouth so i left the usa to my home countery i stii im out countery and i am not doing any job so what i can do to fix my bad cried

  • C. Wilbur

    I had a foreclosure in 2003. Do I have to disclose this for all times.

  • Evan Bedard

    Hello C. Wilbur,

    If you had a foreclosure back in 2003 this will not affect you when applying for a new loan and you’re not required to disclose this information.

  • Harold Brown

    I have been in the process of a loan modification for some years now and have finally got it done but during the process my credit reflected I was in forecloseure! How long now that everything is sorted out will my credit I’m in foreclosure? Because I have been able to keep the home and was not foreclosed on!