Q: We live in Michigan, where the housing market and economy are in disarray. I’m in a bad financial position and am wondering how a foreclosure or a deed-in-lieu of foreclosure will affect my credit history and score.

A: Unfortunately, the fact that your state is in the economic dole drums doesn’t matter when it comes to your credit history and credit score.

A foreclosure and deed-in-lieu of foreclosure are seriously negative pieces of information on your credit history. They’re just this side of bankruptcy, and they will drop your credit score by a hundred points or more, depending where it is when the bank forecloses.

It will take you several years of on-time payments to rebuild your credit, and as many as 7 years for the effect of either of these two unfortunate events to really clear away.

I hope there is a way for you to avoid either a foreclosure or deed-in-lieu of foreclosure. Please talk to a real estate attorney or HUD-certified housing counselor.

July 30, 2007.