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Foreclosure can cause credit scores to drop by more than 100 points if your credit was excellent at the time of your foreclosure, according to Bankrate.com. However, little additional harm was possible if your credit score was already near the bottom of the scale. Credit scores range from 300 to 850, with most people scoring in the 600s and 700s, according to the Consumer Federation of America.
It typically takes two to four years for your credit to recover from a foreclosure, according to Bankrate.com. However, mortgage lenders may hold your rebuilt credit to a higher standard than other lenders. Jay Brinkmann, chief economist for the Mortgage Bankers Association, told CNN in May 2010 that people who walked away from their mortgages during so-called "strategic defaults" may not be approved for a new mortgage for seven or eight years. Strategic defaults became popular amid a U.S. housing bust and recession starting around 2007. Some people found themselves owing more on their houses than they were worth, and elected to simply walk away. People who lose their homes to foreclosure
because of joblessness or illness may be treated differently by mortgage lenders as they rebuild their credit.
There are no shortcuts to rebuilding your credit, according to the Federal Trade Commission. The agency says to ignore misleading advertising from credit repair firms promising to remove foreclosures and other negative information from your credit report. There is no legal or ethical way to remove the foreclosure information before it expires in seven years, according to the FTC.
Only the passage of time will improve your credit, according to the FTC. Bankrate.com recommends making a commitment to paying all your bills on time while keeping balances low.
Opening new credit accounts can help you rebuild after the foreclosure. Depending on your credit score, you may qualify immediately for a regular MasterCard or Visa. Or you can open secured credit card accounts by depositing money into a savings account at a bank or credit union. The amount on deposit serves as collateral for the card. Help your credit rebuilding process by charging small amounts and paying the balance in full each month.