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Can you protect your credit during a foreclosure?

If you are one of the many residents of Washington, D.C. who are facing a foreclosure, you probably have many worries on your mind. Your credit rating is likely to be one of them. Will losing your home affect your credit?

There are numerous reasons many Americans lose their homes, states Bankrate. The most common include job loss or a high mortgage reset rate that can keep homeowners from being able to afford their payments. For whatever reason, a foreclosure will hit your credit report for seven years and can cause your score to drop at least 100 points. Are there any ways you may be able to keep a foreclosure from impacting your credit score?

You may decide to short sell your home. This option allows you to sell your home for less than what you owe on it, while the bank forgives the rest. If the lender agrees to tell the credit reporting agencies that the mortgage has been paid satisfactorily, it should not affect your rating.

It may be worth it to contact your lender to negotiate a rate you can afford or come to other terms that may allow you to stop foreclosure. Credit counseling services may also help. However, it is important to remember that some companies offer false promises or charge high rates for services you may have free access to. It is common for unscrupulous companies to take advantage of people desperate to avoid foreclosure.

The threat of losing your home can be stressful and frightening, but there are reputable services, including some types of bankruptcy, that may help. This information is intended to discuss certain points regarding foreclosure and your credit rating, but should not serve as legal advice.

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