Posts Tagged ‘foreclosure’

How to Fix Credit Score after a Foreclosure?

Just because you have lost your home in foreclosure, it does not mean that this is the end of world. You can still fix credit score and rebuild your financial life. It is true that reflects in FICO reports for the next seven years, but the impact is greater only during the first couple of years. As the record gets older, things begin to become much better. In fact, you can further minimize its negative impact on your finances even during the first few years if you follow certain strategies. It will definitely take some time, but if you follow the right approach and keep patience, your credit will definitely improve, making it easier for you to regain control of your finances. There’s no magic formula. It’s all about making some good decisions and implementing the same thoroughly.

Find Out the Reasons that Lead to Foreclosure

It becomes very complicated to find a solution to a problem when you do not know the reasons that actually lead to the problem. So, before you develop strategies to fix credit score, the first thing that you have to do is to review the situation and evaluate the factors that resulted in foreclosure. Even if this evaluation does nothing, it will at least help you prevent it from happening again. You won’t repeat your mistakes.

Start Budgeting

Once you get a clear picture of what caused the problem and how it is affecting your finances, it will motivate you to do some serious budgeting. The formula is simple – you have to cut down your expenses and do everything possible to increase your income. Even if you cannot get extra income, budgeting will at least help you save a significant amount of money, which you can utilize to make your financial life much easier and smoother. You will obviously have to make some tough decisions because it is often not very easy for anybody to change his/her spending habits. Budgeting also means not doing things that add to your debts. For example, you should stop using credit cards. Use it only when it is genuinely necessary and make sure you pay the bills on time.

Don’t Make Further Defaults

Do some tight budgeting, get a second job, work part-time – do everything possible to save enough money to keep you current on all your payments. At this stage, if you make defaults, it will only worsen your situation, making it more difficult for you to fix credit score.

Reduce Your Debt Level

Prioritize your debts; the idea is to pay off the high rate debts first, such as payday loans. The faster the debt level decreases, the faster your credit score will improve. Stop making queries for more loans. Such things affect your FICO score. Learn to live with you already have. Impose a wait period for yourself for up to six months. Use this period to implement strategies to improve your credit.

Do not take new loans to pay off your existing debts. Overall, if you follow the above steps thoroughly to , you will definitely see some great results within just a couple of months.

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