2020 was a challenging year for everyone, but especially for homeowners. With a decreasing economy, it’s easier to lose jobs and fall behind on mortgage payments- causing homeowners to be subject to foreclosure.
However, foreclosure can have negative consequences on your credit score for years to come. Keep reading to learn why you need to avoid foreclosure in Milwaukee, WI.
What Is Foreclosure?
Foreclosure is a legal process whereby the lender tries to recover the loan balance from a lender who has stopped making payments. For example, a homeowner who fails to pay their mortgage can have the house foreclosed on by their bank. The bank claims ownership of the house and sells it to recover as much money as possible.
In addition to being stressful, embarrassing, and even frustrating, foreclosure can have degrading impacts on your credit score.
Why is Your Credit Score Important?
Credit scores are an integral part of financial life. Your credit score determines your ability to get a credit card or loan, rent a home, and even a good cell phone plan. It tells your lender that you pay your bills on time and that you know how to handle your finances. In simple terms, a higher credit score will allow you to enjoy lower interest rates and increase your chances for financial opportunities to open.
How Long Does a Foreclosure Affect Your Credit Score?
While building an excellent credit score can take a lifetime, it only takes one mistake to bring it down. When a home undergoes foreclosure, the homeowner’s credit score drops immediately and becomes stained for seven years. During this period, you’ll find it hard to get a job, obtain a rental property, or get a new loan. If a loan were approved, the interest rates would be off the charts high due to the low credit score.
Avoid Foreclosure in Milwaukee With Plan B HomeBuyers
Plan B HomeBuyers has helped countless Milwaukee homeowners by providing quick cash offers for their homes. Regardless of your home’s financial situation, we can help you get back on your feet in as little as seven days.
There is no need to wonder, “how long does a foreclosure affect your credit score?” if you can sell your home in record time for cash so you can pay off your mortgage. Plan B HomeBuyers will buy your house as-is, free of commissions, fees, and hassle.