Rebuld Your Credit
Rebuild Your Credit after Foreclosure
If you have been through a foreclosure, you may wonder how do I become a homeowner again? You will need to examine what caused you to fall behind and take steps to correct that pattern. Was it budgeting, job loss, medical or type of behavior?
A foreclosure is a major hit to your credit score and stays on your record for seven years. Foreclosure is one of FICO's deadlies. It is considered a major derogatory item regardless of the back story of how you got to foreclosure. Your credit score will begin to suffer as soon as the foreclosure process begins. The damage to your credit score can very based on your credit score before foreclosure.
So after foreclosure, your priority has to be to rebuild your credit. You have some time to do that since Fannie Mae and Freddie Mac, major buyers of loans, have imposed strict laws on how long it will take before you are eligible for another home loan. For example, those who had a foreclosure caused by job loss, divorce or medical must wait three years before they can qualify and for all others it is seven years. Also, you may have to make a larger down payment with a prior foreclosure.
Here is what you need to do to rebuild your credit:
Pay your bills on time: Your credit scores give the greatest weight to payment histories. You need to demonstrate that you are capable of paying your bills on time and have recovered from whatever circumstances caused the foreclosure.
Review your Credit Report: Your entitled to a free credit report from all three bureaus annually. Get a copy and review it for in accuracies. If you find errors, dispute them with the credit bureau.
Check Your old Mortgage: Make sure you do not owe anything on your old loan. Make sure it shows a zero balance and if you are responsible for a short fall make arrangements to pay it off.
Apply for Credit: Apply for different types of credit. Have some revolving accounts (credit cards), installment fixed payment loan (car loan), but do not apply for to much credit. To many applications tell the credit bureau you may be headed back into problems. Further, to many applications can negatively impact your credit score.
Don't Fall Prey: Watch out for credit repair companies that promise to clean up your credit report after paying them a fee. The truth is no one can remove accurate, negative information from your credit report. It is illegal according to the Federal Trade Commission. Only passage of time can assure that negative, but accurate information on your credit report will be removed.
When it comes to credit, there are no quick fixes. What lenders want to see is a pattern of responsible financial behavior over time.
Consult your attorney of financial adviser for more details and assistance.
For answers to your questions call or e-mail Bill and Susan Clifford CRS ABR
800-759-1112 / 614-785-7018 / email: Cliffords@housesincolumbus.com
