How to Remove Foreclosures from Your Credit Report
October 26, 2023 | 8 min read
Written By:
Credit Saint
Credit Saint
Staff Writer
With years of experience and a passion for helping clients achieve their financial goals, our team is committed to guiding you on your journey to credit recovery and financial success.
Reviewed By:
Ashley Davison
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world every...
Foreclosures can wreak havoc on your credit profile. Not only do they have the potential to drive your credit scores downward, foreclosures on your credit reports can be a major obstacle when you’re ready to purchase another home.
Under normal circumstances, a foreclosure may stay on your credit report for up to seven years. If the account has errors, though, you have the right to dispute them. Information that’s wrong or can’t be verified must be corrected or removed.
What is a Foreclosure?
Mortgages are secured loans. The home you are buying is your asset. It serves as collateral to help you secure financing.
If you don’t keep up with your monthly payments, there’s a danger that the lender could seize your home to satisfy the debt you owe. When you default on a mortgage and the lender starts legal proceedings to take your home away, the process is known as a foreclosure.
How Long do Foreclosures Stay on Your Credit Report?
In general, you need to fall at least 120 days behind on your mortgage payments before a lender will begin foreclosure proceedings on your home. Once the proceedings begin, the mortgage lender or servicer will typically report the foreclosure to the three major credit reporting agencies: Equifax, TransUnion and Experian.
According to the Fair Credit Reporting Act (FCRA), the federal law that regulates the credit reporting agencies, a foreclosure can stay on your credit report for up to 7 years.
The 7-year clock doesn’t start the day the lender begins foreclosure proceedings. Instead, it starts counting down with the first late payment that leads to the mortgage default. This is known as the original delinquency date.
What Happens in Foreclosure?
Foreclosure is a legal process that occurs when a homeowner defaults on their mortgage payments, leading the lender to repossess the property. Here’s what typically happens during foreclosure:
Missed Payments: It starts with the homeowner missing several mortgage payments. The lender will usually attempt to contact the homeowner to discuss the situation and offer options to resolve the delinquency.
Notice of Default: If payments remain unpaid, the lender may, depending on your state, issue a “Notice of Default” (NOD) to the homeowner, informing them of the impending foreclosure proceedings. The NOD typically provides a specific time frame to catch up on payments.
Foreclosure Auction: If the homeowner doesn’t bring the loan current within the specified period, the lender can schedule a foreclosure auction. At the auction, the property is sold to the highest bidder. If the property doesn’t sell, it may become “real estate-owned” (REO) by the lender.
Eviction: After the sale, the new owner or the lender may initiate eviction proceedings to remove the former homeowner from the property.
Foreclosure has serious consequences, including the loss of the home and a negative impact on the homeowner’s credit. It’s crucial for homeowners facing financial difficulties to seek assistance and explore options to prevent foreclosure, such as loan modifications or refinancing.
In terms of credit scoring, a foreclosure is a major derogatory event. When a foreclosure appears on your credit report it may cause severe credit score damage. Although a foreclosure is certainly negative, it’s difficult to pinpoint the exact number of points your credit score may decline whenever one is added to your report.
Scoring models from FICO and VantageScore won’t simply lower your score by a specific number of points when new negative information appears on your credit report, foreclosure or otherwise. Rather, a scoring model will consider all of the information on your credit report collectively and assign your credit score from there.
For example, if your credit score is high and your report is clean aside from the late payments that precede your foreclosure, the addition of this new negative information might have a major impact on your credit score.
Yet if your credit report and score is already in rough shape, a new foreclosure might not impact your score as much as you expect.
To show that the same event can affect different people in different ways, FICO research from 2011 modeled three hypothetical people with FICO Scores of 680, 720 and 780. The table below shows those illustrative estimates for mortgage late payments and a foreclosure. Your own results would depend on your full report.
Starting FICO Score
30-Day Late on Mortgage
90-Day Late on Mortgage
Foreclosure
Person A
680
600-620
600-620
575-595
Person B
720
630-650
610-630
570-590
Person C
780
670-690
650-670
620-640
How does a Short Sale Affect Your Credit Score?
A short sale is a type of settlement in which your mortgage lender lets you sell your home for less than you owe on your loan.
A bank may agree to a short sale in order to avoid the expensive, time-consuming process of a foreclosure or potential bankruptcy filing. But that doesn’t mean that a short sale won’t hurt your credit.
In terms of credit reporting and scoring, a short sale can potentially damage your credit just as much as a foreclosure. Yet if the short sale results in a $0 balance on your credit report, its impact might be slightly less severe than a foreclosure.
Using the same 2011 research, FICO estimated how the same three hypothetical people (starting FICO Score of 680, 720, and 780) might be impacted by a short sale versus a foreclosure.
Starting FICO Score
Short Sale with $0 Balance
Short Sale with Deficiency Balance
Foreclosure
Person A
680
610-630
575-595
575-595
Person B
720
605-625
570-590
570-590
Person C
780
655-675
620-640
620-640
How Long does it Take for a Short Sale to Come Off Your Credit Report?
You won’t find the term “short sale” on a credit report. Rather, the account will show that you settled your home loan for less than you owed.
Like a foreclosure, a short sale settlement can stay on your credit for up to seven years. The credit reporting clock begins on the original delinquency date, which is the first late payment that leads to the short sale.
However, if you were never late on your mortgage prior to the short sale, the account can stay on your report for up to seven years from the settlement date.
Can You Buy a House with Foreclosure on Your Credit?
Purchasing a new home after a foreclosure can be difficult. Even if you rebuild your credit score so that it’s high enough to satisfy a lender’s qualification criteria, you may still have problems getting a new mortgage.
Mortgage companies are concerned with the risk of loaning money and not getting paid back as promised. So, they may be slow to approve a new mortgage application if a previous foreclosure or mortgage settlement appears on your credit report.
Once you allow enough time to pass, however, you might be able to find a lender that’s willing to work with you, even with a foreclosure on your credit. Each lender sets its own approval criteria, but here are the general program waiting periods as of October 2026.
Veterans and members of the armed forces may be able to qualify for a new VA loan as soon as two years after a foreclosure.
You may be able to qualify for an FHA or USDA loan three years after a foreclosure.
Conventional loans (Fannie Mae and Freddie Mac) generally require a seven-year waiting period after a foreclosure is completed. Fannie Mae allows three years if you can document extenuating circumstances, with extra limits on the loan.
Is it Possible to Remove a Foreclosure from a Credit Report?
A credit bureau should automatically remove a foreclosure from your credit report on its own once the seven-year credit reporting clock expires. An accurate foreclosure can legally stay for the full reporting period. It may come off early only when something about how it’s reported is wrong:
Your credit report shows inaccurate information associated with the foreclosure.
The foreclosure is too old to still be on your credit report.
The foreclosure was dismissed, but your report still shows it.
You dispute an error and the lender can’t verify the information.
In these situations, you can dispute the foreclosure with the credit reporting agencies. Under the FCRA, information that’s inaccurate or can’t be verified after a dispute must be corrected or deleted.
If that’s more work than you have time for, a reputable credit repair company can handle the disputes for you. To see where you stand, start a free credit review.
How to Remove a Foreclosure from Your Credit Report
An accurate foreclosure can remain on your credit report for up to 7 years. But if the mortgage account on your report contains errors, you may be able to remove it early. The steps below may help.
Identifying Credit Reporting Errors
It’s important to check your credit reports from all three credit bureaus frequently, especially after a major change like a foreclosure.
You can get a free copy of each report every week at AnnualCreditReport.com. The FCRA guarantees one free report from each bureau every 12 months, and the three bureaus now offer free weekly reports permanently.
Once you have your reports, locate the mortgage account with the foreclosure on each of them. Examine the account closely on each report as you look for errors or questionable information. Keep an eye out for problems such as:
An outdated account (over seven years have passed since the original delinquency)
Incorrect dates (date opened, date closed, wrong late payment dates, etc.)
Inaccurate balance
Invalid account number
Wrong lender name
Any other incorrect or questionable information
Make a note of any problems you identify. You’ll need this information for the next step.
Disputing Errors With the Credit Bureaus
The FCRA gives you the right to dispute information on your credit report that you believe is inaccurate or incomplete. This right covers every item on your report, including foreclosures.
You can file a dispute with Equifax, TransUnion and Experian online or by mail. Explain what’s wrong and include copies of any documents that support your dispute. The bureau generally has 30 days to investigate, or up to 45 days in some cases.
Bottom Line on Foreclosures and Your Credit
A foreclosure is one of the most serious marks on a credit report. An accurate one can stay for up to seven years from the original delinquency date. Check all three reports for errors in dates, balances and account details. If you find a mistake, you can dispute it, and information that can’t be verified must be corrected or removed.
Reviewed By:
Ashley Davison
Editor
Ashley is currently the Chief Compliance Officer for Credit Saint, previously the Chief Operating Officer. Ashley got into the Financial world by working as a Logistics Coordinator at Ernst & Young. Coming from a previous career in education, she is eager to teach the world everything she knows and learn everything that she doesn’t! Ashley is a FICO® certified professional, a Board Certified Credit Consultant, a Certified Credit Score Consultant with the Credit Consultants Association of America, UDAAP certified, and holds a Fair Credit Reporting Act (FCRA) Compliance Certificate.
