It has bad impacts on credit scores whereby it often seems on a credit report for up to 7 years. However, there are some occasions where you can challenge the foreclosure entry and have it expunged from your report before the 7-year period lapses. Here are some tips:
The first thing that you should do is to review all three of your credit reports inclusive of Equifax, Experian, and TransUnion to check on the foreclosure and make sure it is correct. A: If there are any issues with the dates or status mentioned, then this can be changed through a procedure called a dispute.
If the foreclosure information is accurate, you will need to write letters of dispute to the respective credit reference agencies that have reported it. If the situation requires further writing, explain it well in your letter and enclose any relevant documents where necessary. The most common reasons for disputing a foreclosure include: The most common reasons for disputing a foreclosure include:
- It was never properly concluded, or settled, as a foreclosure.
- It was important for the lender to list a wrong date so that they could appear legitimate and not be exposed for what they were.
- By now you have fully paid the mortgage amount
The credit bureaus are obliged to investigate the dispute within thirty days from the date of its filing. If you cannot provide evidence proving the unreality of the foreclosure listing, then they have no option other than to delete it from your credit report.
However, you may be able to persuade the creditor (the mortgage lender) to remove it on their own initiative or at least request the removal of the foreclosure information from your credit reports by sending a goodwill letter to the credit reporting agency asking the creditor to remove the negative information due to hardship. Documents showing that the candidate had a hard time (for instance, losing a job or suffering from a certain ailment) can be beneficial.
Every state has set a time limit within which the lender may come after you for the deficiency in a foreclosure sale (the difference between the sale proceeds of the home and the outstanding balance of your loan). In case the state deficiency date is elapsed, you can refer that in the contentious letters to quickly remove the foreclosure.
For instance, if the state statute requires a 2 year window from the date of the foreclosure sale to sue for the remaining balance and it is now 3 years later, it may be removed by the credit bureaus as the debt is no longer legally manageable and realistic to collect.
If the above mentioned ways fails, then it is advisable to seek the assistance of a consumer rights attorney. Some of the ways credit reporting laws help are that legal specialists in credit reporting laws can write official dispute letters that refer to statutes and file legal cases against the credit bureaus and lenders if necessary. Although you have to spend money when hiring a lawyer, they may be able to respect the removal of a foreclosure from your reports if it is still affecting your finances.
When you have started the process of negotiating for a deletion, at the same time, ensure you also work towards fixing your credit since you would have to pay all current bill on time, keep your credit utilization low, do not apply for credit or new credit, and do anything possible to counter the effect of the foreclosure. The pay history which depicts the past credit performance and credit mix have the potential of enhancing the score meaning the old foreclosure has limited effect. Elevating credit status also helps in supporting goodwill deletion requests.
In rare cases, some prefer to declare bankruptcy as yet another approach to get rid of foreclosure on a credit report, since discharged bankruptcies can report for ten years, compared with seven years foreclosures can report. However, there is even more credit loss possible if other actions are reasonable.
Dispute it actively, however understand that eradicating a valid foreclosure entry will always be a difficult task. The positive news on unpaid foreclosures is that these foreclosures are removed from credit reports after 7 years from the date of initial delinquency that led to the default. It is advisable to continue rebuilding credit so you’re better off as soon as the foreclosure is no longer reflected on your credit reports.