Often people schedule their free consultation when they are worried that they are headed for foreclosure. This is not only a scary time, as you are worried about what the future will hold with your living situation, but you are also worried about the greater implications to your financial situation like your credit score. Keep in mind, though, every financial issue will affect your credit score both positively and negatively. So, which is worse for your credit score – foreclosure or bankruptcy? Let’s find out.
Your Credit Score: What Is It and What Affects It?
Your credit score is basically a number that is assigned to you based on your likelihood of defaulting on payment responsibilities. Credit scoring companies use different criteria and factors when determining your score, but they all generally take the same information into consideration. Here are some factors used to determine your credit score:
Length of credit history
Type of credit
Negative information, like a foreclosure, short-sale or loan modification will remain on your credit report for 7 years. A bankruptcy stays on your report for 10 years.
Bankruptcy vs. Foreclosure: Which is Worse for My Credit Report in Aurora
At face value, a foreclosure has less of an effect on your credit score than an Aurora bankruptcy. But, allowing your home to go into foreclosure does not address your underlying financial issues. You will still have the issues you had before, which is usually that you are dealing with overwhelming debt and an inability to get caught up. Your continued debt issues can continue to hurt your credit score. Bankruptcy does deal with the entirety of your financial issues, allowing you to get a fresh start. Yes, it affects your credit score, but not permanently and not irreparably.
If you are dealing with debt and worried that you may go into foreclosure and need to know your options, contact the best debt relief attorney Barry Arrington at 303-205-7870 to schedule your free consultation.