Rebuild Credit After Foreclosure Five Ways to Rebuild Credit

The Top Five Tips to Rebuild Credit After Foreclosure

If you’ve ever had to deal with a foreclosure on your credit rating, you know it can be difficult. It can drop your credit rating seemingly overnight. You’ll have to build it back up again, and this can seem like a daunting task. This article will discuss how to rebuild credit after foreclosure. We will also talk about how a foreclosure affects your credit score. Finally, we will discuss how to improve your credit score with different credit cards.

How to rebuild credit after foreclosure and improve credit score?

How Does a Foreclosure Affect Your Credit Rating?

Lenders weight your mortgage payments as more important than almost any other payments. They are considered safe, and this is why they can damage your score so fast. There are only 100 or 150 points between excellent and fair credit, and you can fall fast. If you’re late with your mortgage payments, your FICO score will start dropping. A 30-day late payment can make your credit score fall by 100 points. Once you hit 90 days, it can fall by another 30 points. When your lender reports the foreclosure to the credit bureaus, it can drop yet another 30 points. That is over 160 points, and that can put you in a bad credit territory. This score will make it very hard for you to get any lines of credit until you rebuild credit after foreclosure.

1. Stay Current On All of Your Other Payments

If you have other payments, stay current with them. Also, if you’re not current, catch up as quickly as you can. The answer to the question how to raise credit score is easy, on time payments. You want to continue building up a good payment history. This will slowly raise your credit score little by little. It will also show lenders that you can make payments on time each month. This will make you look like a better investment risk. The longer your payment history is, the better it looks to any banks. If you have a variety of accounts, you’re paying on; this looks even better.

2. How to Raise Credit Score with On Time Payments

If you still have credit cards after your foreclosure, keep them. You’ll be able to use them to practice good financial decisions. They will also help you rebuild your credit, and you won’t have to worry about applying for other ones. Credit cards are great for credit repair. They leave a secure payment and use trail for any lenders to follow. If you already have them, you won’t have to worry about additional credit inquiries. Furthermore, if your bank threatens to close your account, call them and explain what happened. Tell them this is a way you’re going to do damage control and credit repair.

2. How to Improve Credit Score with Secured Cards

If you don’t have any access to credit cards, try a secured card. These are an easy answer to the question of how to rebuild credit after foreclosure. Also, they have a low credit limit, and they won’t let you go over. You can purchase Netflix on one and pay it off each month. This will demonstrate to a bank that you’re a responsible credit card user. It is also a way to get access to a higher line of credit quickly. It is a good idea to shop around and find the card with the lowest amount of fees. They are out there; you just have to do your research.

3. Wait to Add More Debt to Rebuild Credit After Foreclosure

If you’re asking yourself how to improve credit score; you may want to wait to add more debt. You want your credit score to be at a high enough level when you get better offers. This may take a little patience, but it will pay off. Your bank may be more willing to overlook your foreclosure if they see a good payment history. If you wait, you can potentially avoid high-interest rates and a higher APR. This can save you a lot of money in the long run.

4. Consider Joining a Credit Union

When you join a credit union, you’ll have to open an account with them. Each transaction you make will become a building block for applying for a loan through them. They’ll take each transaction into account, along with your financial history. This can answer the question how to fix your credit because they usually ignore anything that wasn’t with their credit union. This includes any foreclosures you may have on your credit history and missed payments. This practice can give you a huge advantage over a normal banking institution which looks at everything.

5. Take Time To Learn About Your Score

You won’t know how to rebuild credit after a foreclosure if you don’t know how your credit score works. The first thing you want to do is check your credit score. Once you know your credit score, you can start looking at the types of scores. The FICO score and the Vantage score are the two most popular tools that lenders look at. Finally, you can look at what parts factor into each score. If you do this, you’ll know the answer to how to improve credit score. It will take time, but credit repair is worth it.

This article has gone over the top five tips to repair your credit score. We talked about how to rebuild credit after foreclosure. We also talked about how to raise credit score by having a good payment history. This article can act as a guideline on how to fix your credit. Lastly, with a little patience and a little hard work, it will pay off. You will get your credit score back to where it was.

Monica Kowollik

Director at CreditFast.com
Monica has covered credit card and personal finance news for over 15 years. From an early age, she developed an interest in financial literacy and saving money. Monica hopes to help others to improve their personal finances one article at a time.