In South Carolina, when homeowners can’t keep up with their mortgage payments, they may face foreclosure. Foreclosure can severely affect your credit score, making it tough to get loans in the future.
If you are facing the potential of foreclosure, it is important to understand how it can affect you.
What is foreclosure?
Foreclosure starts when a homeowner fails to make mortgage payments. In a South Carolina foreclosure, the lender must first file a lawsuit, which allows the homeowner the chance to respond. If the court rules against the homeowner, the lender can then sell the home at an auction. If the home doesn’t sell there, the lender takes ownership.
How does foreclosure affect your credit?
Having a foreclosure on your record can drop your credit score significantly. This drop happens because payment history is a big part of what makes up your credit score, and foreclosure shows a series of missed payments.
A lower credit score can make it harder to get credit cards, car loans, and future home loans. It also means you might face higher interest rates. Furthermore, a foreclosure stays on your credit report for up to seven years, affecting long-term financial opportunities.
Exploring alternatives to protect your credit
To avoid foreclosure in South Carolina and the potential credit damage, consider alternatives such as loan modification, refinancing, short sale, or a deed in lieu of foreclosure. Speaking to an attorney may be advisable to learn the options available to you and get representation during the foreclosure process.