A foreclosure lowers your credit rating and remains on your credit report for 7 to 10 years, but the impact it has on your FICO score lessens over time. The FICO score, considered the standard scoring method among creditors, was developed by the Fair Isaac Corporation as a way to predict whether credit users will pay their financial obligations. By some accounts, a foreclosure can lower your credit rating by as much as 200 points, which can raise your interest rates on home, auto, and other loans. If you have a low credit score (e.g. below 600), you can pay as much as 3 percent more on home mortgage interest rates. On a 30-year mortgage, this could equate to thousands of dollars in interest payments. If you have more than one foreclosure on your credit history, you can be denied credit altogether. That said, if you keep all your financial obligations in good standing, the Fair Isaac Corporation says that it is possible to begin improving your score in as little as two years after a foreclosure. According to the company, if you manage to stay current on your other financial obligations, you can minimize the impact of a foreclosure on your credit rating.

Once foreclosure proceedings begin, however, you cannot legitimately remove that information from your credit report. In order to have it removed, you must wait at least seven years and then send a written request to the three primary credit reporting bureaus (Experian, Equifax, and TransUnion). The Federal Trade Commission at www.ftc.gov provides useful information about how to check and repair your credit rating. Visit the Fair Isaac Corporation at www.myfico.com for more information about your FICO score, how it is impacted by foreclosure, and how you can improve your score, even after a foreclosure.