Many feel a sense of panic upon receiving their first delinquent payment notice on their mortgage. If you're in a distressed economic situation, such as recently unemployed, and you can't find the light at the end of the tunnel, you need to act fast. Once the foreclosure is actually processed, it doesn't take long at all for that information to travel from your lender and be reflected in a much lower score on your next credit report.
Financial institutions that report payment experiences with individual consumers to credit bureaus are known as data furnishers. These can be banks, credit unions or individual business; if you have any bill that must be paid every month, it's likely that business can report missed payments to credit bureaus. Banks are not required to notify credit bureaus about positive or negative factors such as a foreclosure, but they will because the lender will want that information on the debtor's credit report for future reference.
Date of Foreclosure
The foreclosure process can be a year or more and begins with a simple letter of delinquency, but the actual date of foreclosure usually occurs a few months into the process. The date of foreclosure, also known as the date of sheriff's sale or public trustee's sale, is the day that the property is sold at auction by the bank to recoup payment lost through the defaulted mortgage. After the date of foreclosure, the new owner must still go through the legal eviction process before removing you from the property.
Data Reporting Cycle
The digital technology used by most financial reporting businesses makes reporting a foreclosure to a credit bureau much quicker, but the process can make the reporting period vary widely in length of time. This is due to the data reporting cycle. Banks and other lending institutions typically bundle payment data from all of their customers and report to the bureaus every month or so instead of reporting data in piecemeal.
When Is It Reported?
A foreclosure won't be reported to the credit bureau until the end of the next data reporting cycle, which can take a few days or over a month. However, once the foreclosure happens, it will likely be reported unless you can persuade the bank not to report. You'll likely have to pay off your entire debt to the lender at once for this to happen.
- Consumer Fraud Reporting: What Are Credit Scores, Credit Reports and How Do They Work?
- RealtyTrac: Foreclosure Laws and Procedures by State
- Kiplinger: "Fast Ways to Improve Your Credit Score," Kimberly Lankford; June 2010
- ATTOM Data Solutions. "U.S. Foreclosure Activity Below Pre-Recession Levels in 61 Percent of U.S. Markets." Accessed Sept. 5, 2020.