Had A Forclosure? Now 2.5 Million Qualify For A Mortgage.

As The economy continues to grow and credit scores continue to rise, many people who are wanting to purchase a home again, are beginning to qualify for a mortgage and shop for a home again.

Credit dings such as short sales, foreclosures, and bankruptcies stay on your credit report for seven years, which means those black marks will fall off the credit files of 2.5 million consumers between June 2016 and June 2017. And most will then qualify for another mortgage.

Experian’s latest review shows 68% of this group with previous dings now have near prime or higher credit scores. Experian takes a look at those who fell into the bad credit trap between 2007 and 2010 and have since applied for a mortgage. According to Experian these borrowers have shown responsible credit behavior, improved credit scores and are keep their debts current. Interestingly enough the borrowers who went through short sales are rebounding quicker than those who went through foreclosures.

qualify for a mortgage
qualify for a mortgage

Qualify For A Mortgage, What The Report Shows

  • More than 12% of those who went through foreclosure have since opened new mortgages and show positive signs when it comes to credit management
  • Just 1.5% of the short-sale group is delinquent on their mortgage – below the national average of 2.8%
  • Nearly 29% of those who short-sold between 2007 and 2010 have a new mortgage
  • The average for this group’s auto loan delinquency is 1.2%, compared with the national average of 2.2%; for bankcards it’s 3% compared to the national rate of 4.3%
  • Just 3% of the past-foreclosure group is delinquent on a mortgage
  • The past-foreclosure people are also just below the national average when it comes to delinquency rates, at 1.9% on auto loans; bankcard delinquency rates are a little higher at 4.1%

“With millions of borrowers potentially coming back into the housing market, the trends that we’re seeing are promising for both the mortgage seeker and the lender,” says Michele Raneri, vice president of analytics and new business development at Experian.

“In the coming years, these borrowers will be a critical segment of the real estate market,” Raneri predicts. “While many of these borrowers have gone through a very difficult time, it is encouraging to see them taking control of their finances with better credit scores and all-around better credit management.”

According to the Vantage Score at Experian credit scores for these buyers have climbed significantly since their foreclosures and short sales, even surpassing the scores they had prior to the negative event:

  • Consumers who had a foreclosure and have subsequently opened a mortgage have an average credit score of 680 – an increase of 20.8% compared with their scores at the time of foreclosure
  • Consumers who had a short sale and have subsequently opened a mortgage have an average credit score of 706 – an increase of 16.5% compared with the scores at the time of short sale.

Experian is a leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision-making. They also provide access to their credit reports to the public, so they can keep track of their credit scores.

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Milton Weiss
Born in cold country up north, I never was happy being cold. Finished college and left for warmer weather and landed in the Caribbean for many years. Met my wife there, had a happy life there and then moved to Palm Beach County, Florida, where we still have a happy life. Warm weather, the sun, and the ocean flow through my body. I hope to bring some of that energy to you.