Credit Damage

• The credit damage of a foreclosure begins long before the actual foreclosure takes place. Your mortgage lender only initiates a foreclosure after you stop making your mortgage payments. Missing a single mortgage payment can cost your credit score over 100 points. Your mortgage lender reports a missed payment as soon as that payment is more than 30 days late.
  
  

Foreclosure Notation

• Foreclosure is a legal process and your local courthouse records the foreclosure in your county's public record database. The credit reporting agencies maintain computer software allowing them to regularly access court databases all over the country and update consumer credit reports with new public records.
  
  The amount of time it takes for the public record noting the foreclosure to appear on your credit report depends on how quickly the courthouse updates its records. This process may take longer if the foreclosure is contested.
  
  

Post-Foreclosure Judgment

• If the foreclosure sale left you owing a mortgage deficiency, the lender can file suit against you for the outstanding balance. The resulting post-foreclosure judgment also appears as a public record on your credit report. Like the foreclosure notation itself, the length of time the judgment takes to appear on your credit file depends upon how quickly the court dockets or "finalizes" the judgment -- officially entering it into the county public record database.
  
  

Time Frame

• Federal law under the Fair Credit Reporting Act requires the reporting agencies to remove the foreclosure notation seven years from the date it was finalized and the mortgage lender's damaging trade line seven years from the day your loan first went 180 days delinquent. If you incurred a post-foreclosure judgment as a result of losing your home, the judgment appears on file for the length of time your state permits lenders to enforce their judgments or seven years -- whichever is the longer period.
  
  

Negative Impact

• A foreclosure alone can lower your credit score over 150 points. Missed payment records and court judgments damage your credit even further. As of 2011, Fannie Mae guidelines require that borrowers with a previous foreclosure wait three to seven years before receiving financing for a new home purchase. The exact waiting period depends upon the circumstances surrounding your foreclosure. In addition, your poor credit rating may make finding a rental home or apartment challenging since landlords typically review your credit history when you submit a rental application.