Credit scores can sometimes seem like a mysterious thing.
However, even if you understand the basics of credit scores, there are a lot of specific questions people can ask about life events and their credit scores. You should be aware of these three most asked questions about credit scores.
What are the top 3 unknown facts about foreclosure and your credit score?
A foreclosure happens when a homeowner can no longer make payments.
To settle the debts they owe, the bank forces a foreclosure for the bank to recover their funds. This usually happens in the sale of the home. You will lose your home in foreclosure, which will also impact your credit score.
1. Foreclosures stay on your credit score for seven years.
When you foreclose, this is reported on your credit score.
This report will stay on your credit report for seven years. This means that no matter how good your score is, a creditor can see your foreclosure. Many creditors do not find individuals with foreclosures to be good lenders.
Many people who have foreclosed find it difficult to get any loan, and the interest rates are extremely high if they do.
2. It can take up to three years to fix your credit score.
A foreclosure will greatly impact your credit score.
If you have a good score, it can drop 100 points. If you have a worse score, it can drop over 150 points. However, a foreclosure doesn’t mean that you can never have a good credit score again.
It will take you up to three years to fix your credit score. It’s all about being patient and practicing good credit habits. Continue to pay your bills on time and keep a low utilization ratio.
3. Build credit with a secured credit card.
Once you’ve foreclosed, you won’t be able to apply for a credit card.
Instead, you will have to take out a secured credit card. A secured credit card is similar to a pre-paid debit card.
You have to pay your balance before you spend, and you can only spend as much as the balance. This ensures that you have the funds and ability to repay your credit. Over time you’ll get an increased credit limit, and you won’t have to pre-pay your card.
What are the top 3 unknown facts about divorce and your credit score?
One of the most important things to know about getting a divorce and your credit score is that your relationship status doesn’t actually impact your score.
Credit bureaus don’t calculate your credit score differently if you are single or married. So, whatever your credit score is when married will be the same when divorced.
Another important fact to know about divorce and your credit score is that divorce does not automatically split up your credits. For example, if you and your spouse had any debt together, they would still be together legally.
Therefore, a divorce does not automatically enact any split.
Lastly, it’s important to know that any joint accounts stay on your credit report.
For example, if you have a loan with your ex-spouse, that will also remain under your name. This can impact your credit score if your spouse agrees to make payments and ends up missing one.
Should all three of your credit scores be the same?
No. All three of your credit scores should not be the same. They should be similar but not identical.
Different credit scores come from different credit bureaus. The most common three are:
- TransUnion
- Equifax
- Experian
These credit bureaus all report your credit score to lenders.
They will not be the same number, because of how the credit bureau factors your credit score. However, they will be similar to each other.
Each credit bureau uses slightly different calculations when assessing your credit scores. These variations in calculations mean no one credit score will be the same. However, the calculations are only slightly different, which is why the three scores should be close to each other but not identical.
Final Thoughts
Understanding all aspects of your credit score is important because it can help you decide how to protect your score.
When making decisions in your life, like a foreclosure or divorce, you need to think about the financial implications those could have. If you are looking at all of your credit scores, don’t panic if they are not identical. They should be similar but not the same.
