The BIG Come Back: Building Your Credit after Foreclosure

Foreclosure comes with many “side effects” and as homeowners face the reality of losing their properties, filing for bankruptcy becomes their only option. With a failing economy, homeowners are left to deal with the issue of the ‘dent’ foreclosure has left in their credit score. If you have a failing credit score, there are ways you can fix that huge dent caused by foreclosure.

The experts will tell you that regaining your credit score will take between 7 to 10 years but the truth is, you don’t have to wait that long to start. Here are some how-to tips on fixing a bad credit score and dealing with foreclosures. Read below and learn what to do and how to recover after getting a foreclosure notice for your property.

1. Don’t throw out your credit cards

Foreclosure does not mean that you have lost access to credit. While it may be more difficult to get it back once you have lost it, you can still benefit from your remaining lines of credit. So don’t throw them away; keep them and ensure that you use them where possible.

Negotiate with your card issuer if they threaten to raise your interest rate or close your account. Just inform them your bills with them are being paid on time and you have every intention to continue doing this. Negotiation will help you keep your existing credit limit and existing interest rate. Most credit cards issuers are usually happy to provide you with credit once payments are up-to-date.

2. Benefit from Secured Credit Cards

A secured credit card is usually the best and only option of available credit if you have a severely damaged credit history. Secured credit cards need a security deposit, most often a minimum of $500 to start it. Once the deposit is paid it is placed in a savings account, certificate of deposit, or money market account.
This is beneficial to you as well as the card issuer because it is a zero-risk proposition. Experian, Equifax and Transunion are informed of your payment history, so by using a secured card and maintaining your on time payments you can improve your credit history.

3. Check out your local Credit Union

Credit unions offer their members lower rates on mortgage, loan and credit card than other lending institutions. Join up as a member so you can benefit from these low rates. Credit unions are more sympathetic to your plight because they usually look at your credit history with them rather than your FICO score with other lending institutions. This option may cause you to pay a higher interest rate because you are still seen as an at-risk applicant, but you will still have access to credit.

4. Stay Current on All Other Debt and Monthly Payments

Maintain your payments on all debts. Making payments on time will improve your credit history. The key is to keep up-to-date on all bill payments such as utility bills, car loans, credit cards, internet contracts, and any other company bills. On time, payments are not reported to consumer related credit reporting agencies but your late payments are reported. This has an immediate negative impact on your credit history.

5. Delay Reapplication for More Debt

Don’t hurry to apply for more credit because this can add further damage to your failing credit score. Keep a tab on your credit score. Wait until it gets to a satisfactory level because this can help you get approval for a new credit card. The bottom line is, although foreclosure is still sitting on your credit score, you can still get a credit card with a high enough FICO score. When creditors see other favorable signs on a credit report, they are more willing to overlook your failing credit score caused by foreclosure.

Final Word Millions of homeowners have chosen foreclosure in a bid to evade personal financial devastation. However, there are ways to minimize the embarrassment and remorse that are often attached to foreclosure.

There is hope if your credit score has hit rock bottom. We have products that can build your credit, monitor your credit, and protect your identity. We also provide affordable legal defense to help you get back on your feet financially. Since we are equipped to provide you with all the necessary tools to help you plan and rebuild your credit history, why not give us the opportunity to lighten your credit score woes?