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How to rebuild credit after foreclosure

These days, record-breaking foreclosure statistics are coming out with numbing frequency.  But what happens to the thousands of people who are headed into the battleground of financial and emotional upheaval? Will you ever become homeowners again?

With some careful planning, strict discipline (as it relates to finances) and time….. the answer is YES, you can become homeowners again.

Here are some tips to help rebuild your credit after foreclosure:

  • After foreclosure, your top priority should be in finding a decent, affordable place to live and start rebuilding your credit.
  • Your next steps will be in getting a copy of your credit report.  Review it for any errors, or inaccuracies and report them immediately.
  • Then get a new credit card or use an existing one.  Pay your purchases off in full each month. It will show you have credit discipline.
  • Try and obtain a small installment loan through a credit union.  Credit unions are typically more forgiving in loaning money to someone who has recently foreclosed.  Pay on time payments to help build your credit score.
  • Re-evaluate your spending habits.   Try to live below your means and save rather than spend any excess income.
  • Be patient. After financial trouble, getting back on solid financial footing takes time.  It can’t be done in a few weeks or months and sometimes takes years.  As time goes on, the red marks on your credit report fade and are replaced with your current, consistent payments on new debt you have incurred through new credit cards and/or auto loans.

Remember there is no reset button or magic trick for your credit score.  Only by taking on new credit and making ‘on time payments’ will you prove to creditors that you are again credit worthy.

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