Credit Repair

Repairing Credit After Foreclosure

Foreclosure is obviously one of the worst words that are there in your hate list. It is an ugly and horrible word. Who wants to lose his/her home after all? However, sometimes when you are going through a bad financial phase, it may happen. And, when it happens, you do not just lose your home, but it also seriously damages your credit score. The good thing is that there are ways to recover from it. Repairing credit after foreclosure is something that you can do on your own provided you are ready to have some patience and to demonstrate some strict financial discipline. It may take some time, but if you are consistent in your efforts, you will definitely achieve your goals. Following is a brief rundown on how to go about it.

Find Out The Reasons Why Foreclosure Happened

The first thing that you have to do is to research the reasons that caused the foreclosure. Look at the mistakes you committed. Do a thorough analysis to find out whether the situation was completely unavoidable or there could have been some ways to avoid the same. Awareness about your mistakes is very important to make sure the same mistakes do not appear in future. When it comes to repairing credit after foreclosure, this is the basic step where you must do some serious brainstorming.

Do A Thorough Analysis Of Your Spending Patterns

Foreclosure happens when you stop making the payments toward your mortgage loan. If that happened, it only means that you were spending money somewhere else. Where? Were you spending for the right things, at the right places? Did you spend your money carelessly without proper planning, without having a budget? If yes, this is the time you must review your spending pattern and get ready to introduce some healthy changes to your spending habits. If you still do not have a budget, have one now. Stick to that budget and focus more on savings. You will need a strong dose of self discipline to succeed with this step.

Whatever Debts Are Outstanding, Pay Them Off In Time

When it comes to repairing credit after foreclosure, you must not make further defaults on other debts that are outstanding in your name. Timely payment of debts can help you improve your credit score significantly. You can notice the healthy changes in your credit report within 3-6 months. If you use credit cards, use it wisely and make sure that you pay the outstanding monthly balances on it in full every month; do not just make the minimum monthly payment. The idea is to reduce the overall outstanding debt balances faster. The faster you pay off your debts, the faster your credit situation will improve. If you find difficulty in managing your debts, you can consider using the services of legitimate credit counseling or debt consolidation companies.

Last, but not the least, if you are serious about repairing credit after foreclosure, you must not make too many enquiries for new credit within a very short period of time, as it may also damage your FICO score.

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