What will going into foreclosure to do my Fico score?

Q: I have a credit score in the high 700s and will be going into foreclosure on a home. Can you tell me what that will do to my Fico score?

A: It is hard to say what your exact score will wind up being once the foreclosure is updated on your credit report, but it will definitely decrease by over 100 points.  When it comes to Fico scores, the higher your score, the more it drops when there is a new delinquency.  Obviously you have not been late on your mortgage yet, or your score would be much lower.  Fico released some very interesting information this past year about credit scores and foreclosures.  They gave an example that might help you get a sense of the impact:

  • 780 Fico score would decrease down to a 620-640 score after a foreclosure and would take 7 years to naturally recover.
  • 680 Fico score would decrease down to a 575-595 score after a foreclosure and would take 3 years to recover.

 

In June, the new Home Affordable Foreclosure Alternatives (HAFA) rules will begin allowing homeowners who are going into short sale but who have no late payment history on their mortgage to have minimal decreases in credit scores.  You might want to look into that option as well.