Developers of the FICO scores recently released this estimate, which tells homeowners about how many points they lose (on their credit score) when they fail to make mortgage payments. When you go into foreclosure, your score drops somewhere between 85 and 160 points, depending on your current credit standing. When your home is being foreclosed upon, the bank looks at is as missed or partial payments on your end, which is viewed as “a serious delinquency”, according to FICO spokesperson, Craig Watts.
When your credit score suffers a loss of that caliber, many things can become much more expensive for you, including debt, loans, and insurance. Additionally, after having your home foreclosed upon, renting becomes more difficult; many landlords consider a person’s credit score before allowing them to rent.
While having a low credit score can cause problems for you, it is important for you to come to terms with your situation. That means, if you are seriously in debt, or have unaffordable mortgages, it would be best to cut your losses and not drag out the problem. Recognize that you are in debt, and then go from there. Getting your finances in order (and avoiding bankruptcy) is more important than having a high credit score.
To read the full CNN article on foreclosure and finances, click here.