Foreclosure happens when you default on your mortgage and your lender takes ownership of the home.
A foreclosure will remain on your credit report for seven years and bring down your credit score. After that period of time, the foreclosure mark should automatically fall off your report.
How a foreclosure affects your credit
A foreclosure’s impact on your credit will depend on your credit standing before the negative mark hit. The higher your score, the greater the likely impact.
In general, though, you can expect a foreclosure to drop your score by 100 or more points, according to a 2011 report from FICO, the credit scoring agency. From the time the foreclosure hits your credit, it can take up to seven to 10 years for your score to recover entirely, FICO also found.
What if a foreclosure doesn’t fall off after seven years?
The credit reporting process is imperfect. That can occasionally result in a foreclosure or other derogatory mark not falling off automatically after seven years.
In that case, you can dispute the credit report error.