Can a Foreclosure or Short Sale Appear on Your Credit Report in California?

If a lender recently foreclosed on your home, or it was sold in a short sale, you may be concerned about the impact it may have on your credit report in California.

Critically, foreclosures and short sales can both have a significant impact on your credit report in California. Nerd Wallet reports that your score can drop by 100 or more points due to a foreclosure. However, while a short sale will still affect your score, how many points it may drop depends upon how the lender reports the short sale to the credit bureaus.

According to Quicken Loans, your score may not be impacted as severely if the lender reports the short sale as “paid in full,” rather than “settled for less than full balance.” It’s essential to understand the lender’s terms and how the short sale will be reported before deciding to enter into any agreement.

What Can I Do if a Foreclosure or Short Sale Shows Up Incorrectly on My Credit Report in California?

After a foreclosure or short sale, it’s important to take a look at your credit report to determine the impact it had — and so you can start to take proactive measures to repair your credit. Foreclosure proceedings, according to Experian, will usually take a month or two to show up on your credit report in California, or in other states. Typically, it will remain on the report for seven years, beginning with the first missed mortgage payment.

According to Business Insider, it’s best to review your credit report at least quarterly, if not once a month, to ensure it is accurate. If there are any errors concerning your mortgage payments, foreclosure, or short sale, you should dispute them with the lender or mortgage servicer.

To protect borrowers in real estate transactions, the state of California has enacted several anti-deficiency statutes. However, while this helps with money, it may not save a credit rating.

If a mistake was made by the lender or mortgage servicer, they must notify the credit bureaus of the error. Importantly, the Fair Credit Reporting Act requires that information providers and credit reporting companies correct any inaccuracies in your credit report.

If you have contacted the credit reporting company to dispute the mistake, they are required to investigate the issue — generally within 30 days. Subsequently, they must provide the data to the lender or mortgage servicer for review. If an error is found, the three credit reporting bureaus must be informed so that the inaccuracy can be corrected.

Additionally, if a mortgage servicer or lender didn’t handle your account properly or engaged in bad faith tactics, it may be best to speak with an attorney concerning your legal rights and remedies.