How Do I Get an Apartment with a Bad Credit Score Caused by a Foreclosure? – Episode #50

August 6, 2008 by  
Filed under Episodes, Foreclosure

A foreclosure can have a significant impact on your credit score. Plus, you need a place to live after a foreclosure.  So how do you get an apartment afterwards?

Apply similar thinking to a secured credit card where you deposit funds to gain credit.  Landlords are trying to avoid risk, and you look risky if you’ve had a foreclosure.  Offering more money in a deposit or upfront rent may help close the deal.

  • Offer the landlord a larger security deposit
  • Offer to pay 2-3 months rent up front

Please don’t offer things to sway them from performing a credit check.   Be authentic, tell them of your situation and make a good faith offer that protects their risk.  Lying will only back to haunt you later.

Learn more about Apartments and Credit Scores.

How Much Will A Foreclosure Impact My FICO Credit Score? – Episode #49

August 5, 2008 by  
Filed under Episodes, Foreclosure, Top Posts

Foreclosures and short sales will impact your credit score significantly!

How many points will my credit score drop from a foreclosure? There is no correct answer here, and anyone who tries to give you an exact point drop is guessing. I’d expect a 100-150 point drop for most folks from a foreclosure. A 200 point drop is more likely if you had a score over 750-800, but I suspect few people are in this scenario, as most people are looking at foreclosure after maxing out credit cards and being late on other loans.

The length of time your credit score needs to recover? Again, it depends, over a year in most cases. A foreclosure is not quite as damaging as a bankruptcy and a bankruptcy can take 18 months or longer to improve your credit score. Your score is not likely to reach the 800s until the foreclosure drops off your credit file and that will take 7 years. Remember, a bankruptcy takes 10 years to fall off your report.

Because of the credit crunch, Fannie Mae has stated new requirements before you can be approved again for a home loan:

  • Foreclosure: 5 years from completion date; additionally between 5 and 7 years you can only purchase a personal residence, and must have a minimum of 10% down and 680 credit score. Also you can only do limited cash-out; no regular cash-outs are permitted. After 7 years you’re back at square one.
  • Deed in lieu: 4 years from completion date; also 10% down payment required between years 4 and 7.
  • Short sale: 2 years from completion date.
  • Chapter 13 bankruptcy: 2 years from discharge date or 4 years from dismissal date
  • All other bankruptcies: 4 years from either the discharge or dismissal date

In addition, you should know that a short sale is seen as similar to a foreclosure by the credit score models. Perhaps, you could get a break as the lender might not report the short sale -whereas a foreclosure will definitely be reported — but I wouldn’t count on this.