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I foreclosed on a home in 2008 and had a 2nd loan which was charged off in 2009. Now, I have myself in a better place and want to purchase a new home. I know I am cleared as far as the foreclosed date, but since I still have the 2nd loan still on my credit report stating charged off. Will it hurt me in the long run if I try to get a home loan? Do I need to pay off the debt before I can get a new loan. They never placed a judgement against me just charged off the dept.
mortgage
Negative items remain on your credit report for 7 years from the date of your first default. Charge-off is a negative item and it hurts your credit score. That’s why it’s better to repay your debt first and then try for a new loan. Moreover lender may not agree to give you a loan if there have any delinquent debts on your credit report.