If you have experienced a foreclosure, you know what it’s like to leave your home, pick up the pieces, and make a fresh start. After losing your home, you have probably resolved to work hard and earn enough income to get another mortgage after foreclosure. Good! You deserve another shot at the American Dream. But you may wonder about your credit score. You know that potential lenders will consider your credit rating and you are concerned that by going through foreclosure you have permanently damaged your chances. You wonder how long after foreclosure you can purchase a home. If you are thinking about buying a home after foreclosure, you first need to understand what your credit score is and how it may factor into a lender’s decision. Your credit history includes all of your credit activities including credit cards, store charge cards, your auto and home loan, and student loans. In order to assess your creditworthiness, most lenders use the credit score system designed by the Fair Isaac Corporation (FICO). It is a sophisticated credit-scoring formula that compiles your credit history and evaluates the risk that you may default on a loan. FICO scores range between 300 and 850. The better your credit history, the higher your score. A score below 620 is typically considered “sub-prime.” “Good” is 620 to 650, and above 720 is seen as “excellent.” According to FICO the median score is 723. A home loan default and foreclosure is a major credit event. Some experts believe that a foreclosure will result in an immediate 250-point drop in your FICO score, and that it will take at least 24 months of perfect credit before a lender will consider you for a reasonable loan rate. A short sale (where your lender agrees to a sale of your house at a loss) may be less damaging. One factor impacting your credit score after foreclosure is how high your credit score was before the foreclosure. Unfortunately, your credit score probably wasn’t that terrific because you were probably late with other payments as well.
For More Information Visit: http://www.floridalawattorney.com