As you can already probably guess the effect of a foreclosure on a credit score cannot be very good. Nor can the impression that it forms on the lender’s mind be positive as well.
The job of a credit bureau to report the information as it is reported to it by the various lenders. It is not the job of a credit bureau to pass judgment or analyze the information present on a person’s credit report. Credit report however affects the lenders decision-making and also the credit score that is calculated for a consumer.
Loosing a home in due to the inability to pay off the mortgage loan does not reflect very well on the debt paying ability of the credit management of a person. A home is perhaps the most expensive and the serious purchase that a person is likely to make in his or her life. If this decision was carelessly taken or a change in circumstances require you to forego this valuable asset then it might also reflect upon your ability to pay off your debts in the future. For this reason the effect on your credit score as well as decision-making of the lender owing to foreclosure will be negative.
A foreclosure remains on your credit report for a period of seven years. So it will have a long-term effect on your credit score.
But once the seven years are over this negative information will be deleted permanently from a credit report and you can start rebuilding your credit by taking control of your debts and building a history of positive payments.