If your real property was foreclosed by a bank or mortgage holder because your payments went into default, this has a significant impact on your credit report. Foreclosure is a legal process by which the lender repossesses your secured collateral–in this case, a home or piece of land–to pay for your unpaid debt. A foreclosure then shows up on your credit history in the "public records" section. The financial advisers at Credit.com caution that a foreclosure is one of the worst possible strikes against your credit report, and you should do everything you can to prevent it. If you want to remove a foreclosure on a credit report, you must first exercise patience.
Step 1
Wait seven years. This is the period of time a foreclosure record remains on your credit report, says Credit.com. During this time, you cannot do anything to remove it.
Step 2
Pull copies of your credit reports seven years from the date of the foreclosure. You can obtain a free copy of your credit report annually through the site maintained by the three consumer reporting agencies. Generally speaking, expired records–in this case, a record that is older than seven years–automatically drop off of your credit report. If a foreclosure continues to be reflected on your report, dispute the old record.
Step 3
Write the consumer reporting agency that shows an expired record of foreclosure in your credit history, advises the Federal Trade Commission. Provide your name and contact information. Inform the consumer reporting agency the foreclosure record should be removed from your report because it has expired.
Step 4
To expedite the dispute process, the FTC advises sending a copy of supporting documentation specifying the date of foreclosure. Also send a copy of your credit report with the foreclosure record circled or highlighted. Make copies of everything you send the consumer reporting agency to keep in your own records.
Step 5
Mail the correspondence by certified mail, return receipt requested. This ensures the consumer reporting agency receives your dispute, notes the FTC.
Step 6
Give the consumer reporting agency around 30 days to investigate your dispute. The agency is required to verify the accuracy of the foreclosure record (in this case, with the court) and send you written findings. If the record is taken off your credit report, you should receive a copy of your updated report.
Tips and Warnings
- Foreclosure has a serious impact on your credit scores, points out MSN Money's Liz Pulliam Weston. If you have a credit score of 680, it will go down by another 85 to 105 points; if your credit score is 780, it will decrease by 140 to 160 points. If you're behind in mortgage payments, contact your lender, advises Credit.com. The best thing to do is get back on track with your payments, including paying any late fees and interest. But your lender may be willing to reduce or suspend your mortgage payments for short time while you get back on your feet.
- Avoid credit repair schemes that promise to remove negative information, such as foreclosures, from your credit report, warns the FTC. Most of these services are scams created to take your money in return for filing a frivolous dispute. By law, consumer reporting agencies are under no obligation to investigate a complaint if the intention is to remove accurate, timely records from your credit report.
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