Have you been affected by foreclosure and forced to leave your home? You can get yourself in this situation due to adjustable rate mortgages. Foreclosure causes emotional stress on a homeowner and affects their credit report. It is unfortunate that the situation can last for years, but all is not lost because you can improve your credit score.
People consider loans for homes as safe forms of credit. This makes Fico scores to take them more seriously than other forms of credit. Being late on a mortgage payment can, therefore, cause a dramatic drop on a FICO score. This drop can make it hard for you to get a personal loan or even a credit card. It takes careful planning for you to raise this score after a foreclosure.
You can boost your credit score after foreclosure by keeping your credit cards and using them. Most homebuyers assume that a mortgage default takes away their access to credit. Some credit card issuers may close your credit cards when you default a home loan, but they don’t deny you total access. A foreclosure does not mean that your financial life is over. You can still access your credit even in this situation. Keep an existing line of credit and use it as much as possible.
You can explain your situation to a card issuer who tries to increase your interest rate. Explain that your case will not deter you from settling your bills with them. Try to negotiate with them so that you can maintain your interest rate. You have to ensure that you continue paying them on time for them to offer you credit.
Get a secured credit card to help you rebuild your credit score. Credit card issuers and banks understand the value of secured credit cards. This makes them charge high application and billing fees on secured credit cards. Through shopping around, you can, however, get one that that has low fees to help you improve your credit score.
Access such a card does not require a good credit history. You only have to deposit some amount with the card issuer for it to act as security on this credit card. It benefits your credit card issuer since there is no risk involved due to the security placed. The bank reports your payment history to TransUnion and Experian. By using the secured card, you improve your credit history as long as you continue settling your debts on time.
Take advantage of local credit unions. These can provide you with low loan rates without focusing on your past mistakes. You can get a credit card by becoming a member of a local credit union. You also need a savings account to benefit from the credit union. It gives you access to credit even if you may pay high-interest rates.
You should also be consistent on debt payments to set a positive payment history on your credit. Extended payment history has a significant impact on your credit score, and it eventually raises your credit rating after the foreclosure.