Bankruptcies and foreclosures can remain on a
credit report for seven to 10 years.
Some lenders will consider a borrower earlier if they have reestablished good
credit. The circumstances surrounding the bankruptcy can also influence a
lender's decision. For example, if you went through a bankruptcy because your
employer had financial difficulties, a lender may be more sympathetic. If,
however, you went through bankruptcy because you overextended personal credit
lines and lived beyond your means, the lender probably will be less inclined to
When you have bankruptcy or a foreclosure in your
credit history, it’s even more important to make sure you are keeping up with
other bills and working towards repairing your credit. You may need to wait
several years before your credit score improves after the negative impact from
these credit problems, but you may be able to remove them from your credit
history completely within seven to ten years.
The Property Shop
(310)571-5973 - Direct
The credit consequences of a short sale and foreclosure vary slightly.
The general consensus is that a short sale will show up on your
credit report as a 'settlement', 'settlement for less than owed' or a
"pre-foreclosure in redemption". Also, since most lenders will not
allowing a short sale until a few payments have actually been missed you
may also have a few 'lates' on your credit report. Neither of these
marks is a good thing to have but it's possible to get them off of your
credit report within a few years or less. A short sale can drop your
credit score by 80-100 points. There is also the possibility that
through negotiation with the lender you can avoid having the short sale
to a credit agency.
A foreclosure on your credit report can take 7-10 years to remove and
can cost your credit rating (FICO) up to 200-280 points which is a
very big hit.
So, if you have no better alternatives, pursue a short sale aggressively and avoid foreclosure.