When it comes to your financial health, choosing between foreclosure or bankruptcy is the last thing you want to be put in a position to do. However, life circumstances can occur that puts you in a challenging spot where this decision is a reality. Working with the top credit repair companies can give you a little peace of mind, though. We’ve explained which option is worse for your credit score when it comes to foreclosure or bankruptcy.
How Foreclosure Impacts Your Credit Score
Going through a foreclosure can be scary for many reasons. When it comes to your credit score, foreclosure can leave a major dent in your report. And it’s difficult to remove from your report, which means it could impact you for up to seven years. When you foreclose on your home, the chances of receiving a new mortgage are low and your interest rate likely will not be ideal. The best suggestion credit specialists usually offer is to work to improve your credit as much as possible so you can prove to lenders that one unfortunate circumstance shouldn’t determine your creditworthiness.
How Bankruptcy Impacts Your Credit Score
One of the best things about filing for bankruptcy is creditors must stop calling you to collect debts. Most people file for Chapter 13 bankruptcy, which can help you pay off your debts a little easier via a payment plan. However, filing for bankruptcy can leave a major mark on your credit report for up to ten years. Lenders will often disqualify loan applicants if they see bankruptcy in their credit history.
Speak With Credit Specialists About Your Specific Situation
So when it comes to the question of whether bankruptcy or foreclosure is worse, the answer depends on your financial situation and other circumstances. The top credit repair companies typically advise against foreclosure simply because future lenders might shy away from offering you a loan. While bankruptcy is not ideal, it at least shows lenders that you faced your debt head-on and are willing to work hard to pay it off.
Core Credit Solutions provides specialized credit repair in Los Angeles for people who need it most. It can be very intimidating when you’re facing foreclosure or bankruptcy, but our credit specialists will work with you to determine the best solution. The worst thing you can do is make an emotional decision that impacts your financial future negatively. If you need peace of mind and assistance navigating difficult financial concerns, don’t hesitate to contact us to schedule a consultation and see how we can help.