Will a Bank Consider Giving Me a Loan After Foreclosure?

Reader Question: How long does it take for a foreclosure to be removed from your credit history? My financial situation has improved but will a bank even consider to loan me money with this foreclosure?

A foreclosure will show up in the "public records" section of your credit report, because it's a form of legal judgment. In most cases, it stays on their for seven years. It must come off your credit report after that, in accordance with the Fair Credit Reporting Act.

I don't know if a bank will consider making you another loan right now or not. That will depend on many factors, such as your current credit score, the amount of time that has passed since foreclosure, your debt-to-income ratio, etc. In other words, it will depend on how well you qualify in other areas, and how long it has been since the foreclosure.

Here's something else to keep in mind. There were record-breaking numbers of home foreclosures over the last couple of years, and this trend looks like it will continue through 2009. In many cases, the homeowners were only partially at fault, while in other cases the homeowners basically brought it on themselves.

I think that once the economy recovers a bit more, mortgage lenders will have to consider people with foreclosures in their past ... simply because there are so many people in that situation. So a lender will look at the circumstances surrounding the foreclosure, what the person has done since then, and the other qualifying factors mentioned above.

In other words, don't give up hope. It could just be a matter of time and "good behavior."