- A foreclosure is one of the worst things to have on an individual credit report, rivaled only by bankruptcy. It can drop credit scores by hundreds of points and make it very difficult for debtors to get future loans, at least for a couple years after the foreclosure. Foreclosures can stay on a credit report for up to seven years, and while borrowers can rebuild their credit scores, they cannot take a legitimate foreclosure off of their report until this time period has completed. However, borrowers can petition to have foreclosures removed in special cases.
- There are many statistics regarding credit report errors: essentially, they are common and it may be that a credit reporting agency has made a mistake in reporting a foreclosure. Maybe the foreclosure amount is incorrect, maybe the process was incorrectly listed (which can happen if a short sale takes the place of the foreclosure but the credit report is not changed) and maybe the foreclosure has reached its seven-year lifespan but remains on the report. In this case, borrowers can file to have the foreclosure status corrected by credit agency.
- In some cases, a foreclosure can begin but eventually be thrown out by a court if the foreclosure was not conducted properly. Lenders must follow state laws and their own contracts. If they do not, borrowers can petition a court to stop the foreclosure process, often successfully. However, credit bureaus will often keep the foreclosure on their records. In this case, the borrower can petition to have the foreclosure completely removed.
- Petitioning a change in a credit report can be an exhausting process. Borrowers should prepare all necessary financial documents and proof of their claim before contacting a credit agency. The credit agency will then turn to the lender in question and ask for more information. If the lender does not provide information within the required timeframe, then the borrower can demand that the foreclosure be removed and the credit agency must comply.
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