Deed-In-Lieu of Foreclosure Drops Credit Score
REM #F760
By Ilyce R. Glink
Summary: A ThinkGlink reader is planning on foreclosing or using a deed-in-lieu of foreclosure on his house. Ilyce explains how this will drop his credit score and take up to seven years to get off his credit report.
Q: We live in Michigan, where the housing market and economy are in disarray.
I’m in a bad financial position and am wondering how a foreclosure or
a deed-in-lieu of foreclosure will affect my credit history and score.
A: Unfortunately, the fact that your state is in the economic dole drums doesn't
matter when it comes to your credit history and credit score.
A foreclosure and deed-in-lieu of foreclosure are seriously negative pieces
of information on your credit history. They're just this side of bankruptcy,
and they will drop your credit score by a hundred points or more, depending
where it is when the bank forecloses.
It will take you several years of on-time payments to rebuild your credit,
and as many as 7 years for the effect of either of these two unfortunate events
to really clear away.
I hope there is a way for you to avoid either a foreclosure or deed-in-lieu
of foreclosure. Please talk to a real estate attorney or HUD-certified housing
counselor.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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