How To Make A Credit Repair After Foreclosure

Foreclosure on your home can wreck havoc on your personal credit, so be sure to make your payments on time. Keeping your debt to credit ratio well within the proper realm can help you reclaim your credit and rebuild your credit history.

You may think that the best way to go about a credit repair after foreclosure is to remove all of the bad credit from your rating. This is not entirely true. It may sound weird, but in actual fact a less than perfect credit score is sometimes higher in the list of credit scoring than a 100% perfect score. In some circumstances you can get credit repair after foreclosure by more than 100 points without actually removing every negative score from your credit list.

Find out your Credit Score

In order to get credit repair after foreclosure you need to get your hands on your credit report before you can start repairing your credit history. That way you know what you're up against. It's no good guessing what is on there. For a small charge you can order your credit report online or through the mail.

Credit reports can be confusing, but don't just give up if you’re attempting credit repair after foreclosure; that's exactly what credit companies would prefer that you to do; that way they earn more money. Learn to read your credit report and benefit from being able to see exactly what it is that you need to do. Taking control of your credit report is the first step towards credit repair after foreclosure.

Think of your Credit as a Job

Your credit rating, if it's good, can give you access to money that can be interest rate free. So you could access to maybe up to $20,000 at an interest rate that is 0%. You could have many opportunities to use this money and pay it back before you start paying any interest on it.

If you need to get credit repair after foreclosure you want to change your credit report for the better to help yourself and your family. Why wouldn't you? You may want to do this quickly, adding positive aspects to your credit report. But don't be fooled into getting rid of all the negatives on your account and not leaving any positive credit ratings; this then gives you no credit score, which can in the long run be just as damaging as a negative one.

Have you instead got high debt and feel there is no way out? If this is you, such as if you are trying for credit repair after foreclosure then you probably have some good credit, but you have so much bad credit that you have debt encircling you and getting ever closer. You need to be able to pay back your debts for as little as possible to start on the road of correcting your credit rating. Again you need to be able to add positive credit to your report to counter act the negatives.

Building up Credit

If you need to do a credit repair after foreclosure then you need a plan to get this back on the right track. Pretty much everything you do in your life, affects your credit rating, even, things that you probably do not realize affect it: Things such as:

  • how much car insurance you pay
  • how much house insurance you pay
  • how you pay it
  • possibly even health insurance

Your job can also affect your credit rating more than you would think.

You will need to think of ways to get a good credit rating for yourself if you are building it up from nothing or from a bad rating through foreclosure. You can build your credit rating by having what is commonly known as a high credit limit. This is an unsecured debt in your name for example, credit cards and store cards in particular.

What is an Unsecured Debt?

Unsecured debt is easy to remember; just think of your mortgage or a car as a secured loan and everything else as unsecured.

If you are trying for credit repair after foreclosure you need to look at your credit report and see how many credit cards you have and exactly how much credit is given on those cards. You may have two cards totaling $2,000 of credit limit; now, this makes you less attractive to a credit company than someone else that has two credit cards totaling $20,000. Weird huh?

Debt to Credit Ratio

The next major contribution to credit repair after foreclosure is your debt to credit ratio. This allows future lenders to see exactly how much you have borrowed in the past and at how much interest each time. This will obviously let them decide if they should lend to you, and how much they should lend in total. Your debt to credit ratio is calculated in percentages. Take for example, if your debt to credit ratio is 50%; this means you have borrowed and have paid back half of what you have borrowed. If you have 80% debt to credit ratio, this means you have borrowed less then what you have as debt. You need this ratio to be around 10-30% at any given time.

If you use credit cards efficiently then they can get credit repair after foreclosure.