A foreclosure can stay on one’s credit report for up to 7 years. It can also drop one’s credit score 100 points or more, and it can make obtaining another mortgage in the future very difficult. The following will look at ways of rebuilding credit after foreclosure so it will not stand in the way of financial progress later on.
Phoenix, AZ -- (SBWIRE) -- 12/04/2012 -- One of the first steps to rebuild credit after foreclosure is getting a copy of one’s credit report from each of the major reporting bureaus, Equifax, Experian, and TransUnion. A foreclosure is noted in the “Public Information” section, which shows any judgments made against a person. Looking at the damage foreclosure can cause on one’s credit report gives good impetus to delve into why it happened in the first place so the ineffective financial handling won’t occur again. Another step to repair a poor credit standing is to pay off all monthly bills as they come in. This indicates that one can be trusted to use money wisely in spite of a foreclosure. Don’t max out credit cards, as one’s credit utilization – the ratio of total debt to total credit – adds up to 30% of a credit score. Pay any outstanding credit card balances off to engender positive creditability.
Expert Guideline to Get Your Bad Credit on Track
Other methods of rebuilding credit after foreclosure include obtaining new credit cards. The charge cards one may qualify for post-foreclosure will most likely be secured cards. This means that one must put a certain amount of money into an account for which the issuing lender will give an equivalent line of credit. Use the secured card just as one would use an unsecured one and make the payments on it on time and in full. Eventually, as lenders and creditors see responsible use of finances, one will be offered an unsecured credit card, albeit with a higher interest rate perhaps. Make sure nothing is outstanding on one’s former mortgage, as it can continue to wreak havoc on one’s credit score. If any amount is left over from the foreclosure, make arrangements to pay it as soon as possible.
Often, when a person is trying to rebuild credit after foreclosure, credit repair companies come out of the walls, so to speak. Most of these companies truly want to help individuals regain a positive credit standing; unfortunately, not all of them do. Be careful of scams designed to trick money from unsuspecting persons. If a credit repair company requires up-front fees or wants personal information such as credit card numbers before providing any service, don’t deal with that business.
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