Your home loan is one of the largest - if not the largest - debt you'll ever have. If you cannot pay it that will certainly be detrimental to your credit score, but each case is different and each individual may be affected differently. For instance, if your mortgage is the only debt you have then, when you are unable to pay it and your property goes into foreclosure, your credit score may be affected by up to 200 points - maybe more. This will make it very difficult to obtain additional credit line and should you obtain additional credit lines, the interest rates would be much higher.
However, if you have several other debts such as student, credit cards and car loans and you are paying them off on time every month, then your credit score will not be affected quite so dramatically. This is because you have some positives to offset the negative. In fact, the score may only dip by about 90, thus leaving you well able to obtain more credit in a few years, and at a better rate of interest.
Of course, if you cannot keep up the payments on your mortgage now, then you are not likely to be able to do it in the near future, so whether you can get credit or not may not be a matter of concern to you. However, once your debt is cleared up and your life takes a turn for the better, you may need to get credit to replace an old car, or some other lesser loan. You don't want to be paying high interest on any loan, no matter whether it is a big or small amount.
A person's credit score is based on the previous seven years of buying history, and the whole of it is looked at when you go to borrow money. That's why when your home mortgage is the only one you have and you default on the payments it sticks out like a sore thumb and affects your score greatly.
But if you have many other debts that you are keeping up the payments on, then one debt in arrears does not seem as bad. Of course, if you have other debts that you cannot pay off, then the credit score situation gets really grim. But even if you cannot get credit, this may not be the disaster that it seems. It will make you discipline yourself to keep good spending habits and you will learn how to save your money instead of spending it. Living on credit is not a good thing if it can be avoided.
A foreclosure remains on your credit report for 7 years, but its impact to your credit score will lessen over time. While a foreclosure is considered a very negative event by your credit score, it's a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years.
Teresa R. Martin, Esq. is an Attorney, Speaker, Financial Health coach who has helped hundreds of individuals and families improve their lives through real estate investing, credit counseling and financial education. Download free report "Your Credit Repair Solutions." http://eepurl.com/y-hZD
Article Source: http://EzineArticles.com/?expert=Teresa_R._Martin,_Esq.
Article Source: http://EzineArticles.com/7747381
However, if you have several other debts such as student, credit cards and car loans and you are paying them off on time every month, then your credit score will not be affected quite so dramatically. This is because you have some positives to offset the negative. In fact, the score may only dip by about 90, thus leaving you well able to obtain more credit in a few years, and at a better rate of interest.
Of course, if you cannot keep up the payments on your mortgage now, then you are not likely to be able to do it in the near future, so whether you can get credit or not may not be a matter of concern to you. However, once your debt is cleared up and your life takes a turn for the better, you may need to get credit to replace an old car, or some other lesser loan. You don't want to be paying high interest on any loan, no matter whether it is a big or small amount.
A person's credit score is based on the previous seven years of buying history, and the whole of it is looked at when you go to borrow money. That's why when your home mortgage is the only one you have and you default on the payments it sticks out like a sore thumb and affects your score greatly.
But if you have many other debts that you are keeping up the payments on, then one debt in arrears does not seem as bad. Of course, if you have other debts that you cannot pay off, then the credit score situation gets really grim. But even if you cannot get credit, this may not be the disaster that it seems. It will make you discipline yourself to keep good spending habits and you will learn how to save your money instead of spending it. Living on credit is not a good thing if it can be avoided.
A foreclosure remains on your credit report for 7 years, but its impact to your credit score will lessen over time. While a foreclosure is considered a very negative event by your credit score, it's a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years.
Teresa R. Martin, Esq. is an Attorney, Speaker, Financial Health coach who has helped hundreds of individuals and families improve their lives through real estate investing, credit counseling and financial education. Download free report "Your Credit Repair Solutions." http://eepurl.com/y-hZD
Article Source: http://EzineArticles.com/?expert=Teresa_R._Martin,_Esq.
Article Source: http://EzineArticles.com/7747381
No comments:
Post a Comment