Over the past decade or so, homeowners across the U.S. have been foreclosed upon at an alarming rate. Many of them have had to file for bankruptcy. The damage this action has upon one’s credit rating is far-reaching. The following information will offer some insight into the effects of foreclosure on credit standing and will suggest methods about how to rebuild credit after bankruptcy and foreclosure.
Phoenix, AZ -- (SBWIRE) -- 10/04/2012 -- Periodically, one’s financial standing takes a beating, often from a loss of monthly household income due to injury or illness. When this happens, people start to fall behind on their bills, which sometimes results in declaring bankruptcy. While bankruptcy is often the last possible option when money gets tight, it can stop foreclosure proceedings on one’s home, making it possible to remain in it. Bankruptcy does, however, wreak havoc on one’s credit score. That said, repairing credit after bankruptcy is not the onerous chore it may appear to be, but it does take time. Here are some ideas on how the process works.
Start by obtaining a free, once-yearly, credit report, available from any of the Big Three reporting bureaus: Experian, TransUnion, or Equifax. Upon receipt of it, go over it very carefully, noting and then disputing any errors. It will take some time to have these items removed from the credit report, but each one taken off equals a higher mark on one’s report. Next, pay all monthly bills in full and on time. As payment history makes up 35% of one’s credit score, consistently making on-time payment goes a long way toward improving it. Another idea is to get a secured credit card – that is, one for which a deposit is given to the issuer who then gives a line of credit equal to that amount to the depositor – and pay it off in full each month. All of these suggestions will help rebuild one’s credit.
People with low credit score can rebuild credit
Some of the same suggestions from above also apply to how to rebuild credit after foreclosure. Additional thoughts are defining the cause of the foreclosure, whether it was poor financial management or simply not enough money to cover all the monthly expenses. Often, knowing the source of a problem prevents it from happening again. Adjust spending habits, devise a strict budget and adhere to it, and pay all other, non-mortgage bills on time each month. Enlist the aid of a credit counselor if unsure of how to repair credit after foreclosure on one’s own.