How badly does a foreclosure affect credit rating? It’s quiet a common question these days. A foreclosure can drastically affect your credit rating and should only be considered as a form of last resort. It is rumored that a foreclosure can affect your credit score by 200-300 points. That means if you have an excellent score of 800, your score will be lowered down to 500, which is considered a negative credit score.

It is mandatory that a creditor not offer you any financing for 24 months after a foreclosure. This limit is not only used for home financing but also for any type of credit. So you won’t be able to buy a car, take out college loans, or even finance something as small as a computer. It can also affect your ability to find an apartment, since landlords use your credit score as a means of determining how trustworthy you will be as a renter. The same can be said about trying to get a phone number or cable, as they will also check your credit for reliability.

The good news is that the harmful effects of a foreclosure can begin to reverse after the 24-month period has passed. A foreclosure will not be completely removed from your record until after seven years; however, some lenders will offer financing after two for small loans. You can expect to be able to buy a home again from some lenders after about five years; however, you will definitely be assessed a very high interest rate. If you choose to finance a home with a high interest rate, you will be able to refinance the home after the foreclosure has wiped your credit report, assuming you have a stable payment history.