How to Remove a Foreclosures from Your Credit Report

Since the housing crisis of 2008, the number of foreclosures has decreased. However, there are still enough to be a cause for concern, despite the improvement in market conditions. And maybe your financial wellbeing is suffering from a recent foreclosure.

Or perhaps your home wasn’t foreclosed because the lender allowed you to “short sell” it for less than what you owed? The impact on your credit score for either negative entry is similar. And you’ll follow the same protocols to have them removed.

How do foreclosures and short sales impact your credit score?

Unfortunately, foreclosures and short sales are detrimental to your credit report. Your score will drop by at least 100 points as soon as the negative entry is reported.

You must also consider the impact of foreclosures and short sales have on your credit score before they are reported. Because you’ll have skipped making payments for at least 90 days, the lender will report late payments to the credit bureaus. And these entries will also tank your score by between 90 and 110 points.

Fortunately, there are ways to start rebuilding your score even before the foreclosure is removed or ages off your credit report. (More on that shortly).

How long will a foreclosure or short sale remain on your credit report?

Both foreclosures and short sales remain on your credit report for seven years. As mentioned in the previous sections, the initial impact to your credit score will sting. But expect your score to start rebounding as time progresses as long as you manage all other components of your credit profile responsibly.

During this time period, you may also experience several other negative consequences, including:

  • Lower approval odds when applying for new credit
  • Higher interest rates on your existing credit card products (which results from the change in your credit rating)
  • More expensive insurance premiums if applying for new coverage
  • Higher security deposits for rental properties and services, like utilities and cell phone service
  • Disqualification from the pool of candidates for your dream job if the employer requires credit screenings as a part of the background check

Is it possible to remove a foreclosure or short sale from your credit report?

The burden of proof is on the lender to verify that the foreclosure is accurate.

If they don’t have the original records on hand or are no longer in business, you may have a strong case to have the foreclosure removed. You can also have it removed if there are inaccuracies in the entry on your credit report.

But to have it removed, you must decide between the DIY approach or hiring a reputable credit repair company to do the work for you.


The foreclosure entry may not be the same across the board, so it’s important to review the details on each credit report before drafting up dispute letters. Also, keep in mind that you’ll need to send dispute letters to each credit bureau as they do not communicate with one another.

When drafting up your dispute letter, you can take one of the following approaches:

  • File a formal dispute with the credit bureaus requesting that the lender verify the foreclosure. As stated earlier, the information furnisher or lender must be able to provide adequate documentation to prove that the foreclosure is indeed valid. If they are no longer in business or are unable to locate your records, that means they cannot furnish information needed to the credit bureaus within 30 days. And as a result, the foreclosure entry must be removed from your credit report.
  • Point out inaccuracies with the entry on your credit report in the dispute letters sent to the credit bureaus. If any of the information related to the foreclosure is listed incorrectly in your credit report, it must be updated or removed within 30 days. This includes the name of the lender, account number, and balance at the time of foreclosure.

Hire a reputable credit repair company

Do you prefer to leave the foreclosure removal process to the professionals? Consider hiring a reputable credit repair company to handle this task for you. They have the tools, experience, and expertise to work with the credit bureaus and lenders so you have the best chance of success with the removal.

Can you purchase a home after a foreclosure or short sale?

Considering purchasing a home even though you’ve gone through a foreclosure or short sale? Some important considerations:

  • If the foreclosure or short sale is removed from your credit report and are using a different lender, you probably won’t have any issues qualifying for a new mortgage no matter the time frame. This is because your score is probably above the qualification criteria and they have no knowledge of your history.
  • If the foreclosure or short sale is still on your credit report, expect to wait at least two years before qualifying for a mortgage. But even if you meet the minimum credit criteria after this period and have the income to back it up, the lender may offer you a higher interest rate. They may also ask for a higher down payment, and your PMI may be much higher (if you put less than 20 percent down).

Tips to help rebuild your credit after a foreclosure or short sale

Manage existing credit responsibly

The presence of a foreclosure on your credit report doesn’t mean existing creditors will automatically shut off your credit cards. And they definitely won’t ax your car loans. Yes, your credit card issuer may increase your interest rate when your score drops, but you should continue to keep balances below so your score can benefit from responsible debt management.

Remember, amounts owed account for 30 percent of your credit score. So a debt utilization ratio of 30 percent or lower on revolving credit is ideal.

Make timely payments on all other outstanding debts

Not only should you keep balances low, but you also want to make sure you stay current on all your outstanding debt. The last thing you need is a 30-day late payment mark or new collection account reported on your credit profile.

Refrain from applying for new credit

Each time you apply for credit, a hard or voluntary inquiry appears and decreases your score between two and five points. The inquiry remains on your report for 24 months and your score usually recovers rather quickly. However, multiple applications for credit (with the exception of rate shopping for a loan) will do damage to your score. So it’s best to refrain from applying for new credit when you’re trying to rebuild your credit after a foreclosure.

Apply for a credit builder loan or secured credit card

You can try applying for a credit builder loan or secured credit card. These products cater to borrowers with less than perfect credit scores. They also report payment history to strengthen your credit score. The only drawback is that the security deposit requirement (equal to the loan amount or credit line) to open the account.

The bottom line

It may take some time to have a foreclosure removed from your credit report. But being persistence may lead to the results you seek. You can also reap the benefits of an increased credit score by managing all your other debt responsibly.

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