How To Fix Credit After A Foreclosure
Not only is foreclosure a traumatic experience, but it can also be devastating to your credit profile. However it is possible to repair your credit in the aftermath of a foreclosure if you are willing to put in the time and effort it’s going to take.
Know in advance that this is not going to be a speedy recovery, nor is it going to come about without significant changes to your financial outlook. Most foreclosures are a result of poor spending habits and living beyond your means. If you’re not willing to change these routines than the results will never change.
Pay Your Bills on Time
This should really go without saying, but many consumers feel that their credit is already ruined so this won’t make any difference. They’re wrong! The older your foreclosure gets, the less impact it will have on your credit scores. However, continue to demonstrate that you are unable to keep up with the bills that you do have and lenders will never be willing to offer you a loan or a line of credit.
As time goes on, picture a clock in your head that is showing the time that you have been responsible ticking away. Every time you are late with a payment you reset the clock back down to zero. The longer your credit reports show that you have been making payments on time, the less past mistakes will hurt you and the more your credit score will increase.
Implement a Budget
If your foreclosure was a result of not being able to live within your means, then you need to address that problem. Budgeting is a surefire way to focus on where your finances are being utilized as well as cut down on frivolous expenditures. If you stick to your budget it will force you spend your money in a much more organized fashion, while decreasing the dreaded impulse purchases.
Adhering to your budget is usually harder than sitting down to plan it out, but if you don’t, then the time you spent arranging your finances will be useless. Use online tools or banking services to make sure that you stay on the ball.
Use New Credit Wisely
New credit is going to show lenders that you have turned over a new leaf and can comfortably repay the money that you’re borrowing. Only if you are able to show that you are using it sparingly though. Try to keep your credit card balances low and make more than just the minimum payments. Not only will this boost your credit score but it will also let lenders know that you’re not applying for more money because you’ve already borrowed as much as you can and need more.
Learn to Be Patient
The foreclosure has damaged you for right now, but if you know how to fix credit mistakes then it won’t haunt you forever. This is obviously not an overnight fix, but if you’re patient you can have the credit score you enjoyed before the foreclosure. After a year or two, if you have been diligent with your credit repair process, you should be able show that this was just a bump in the road. A foreclosure is not the end of the world, with a little effort, you will be back on the road to financial security.
Japhet Cantos is a Client Advisor with industry experience in Credit Repair Services and Debt Settlement Solutions with My Credit Group Inc. – A nationally recognized authority on credit repair, helping people improve their credit scores legally and effectively for over a decade. Consultations are free and credit repair is backed with a risk-free guarantee.
