What does a foreclosure do to your credit?
Today, foreclosure rates in the United states are higher than they have ever been before. With so many homeowners having financial problems many of them can no longer afford their monthly mortgage payments. If you have not been able to achieve a workout plan with your lender and are behind on payments, chances are they will probably end up foreclosing on your property.
The most common question asked by homeowners who are facing this problem is “How will this event affect my credit rating?” Well the truth is, this is one of the most dreadful events that will affect your rating.
It is said a foreclosure will drop your rating anywhere from 200-300 points, because of this it’s crucial to begin rebuilding your score immediately.
If your lender has declared foreclosure you can expect your score to drop dramatically, and stay that way for up to quite sometime. This mark will stay on your credit score for about the next seven years. During the first two years after your property is sold will be the most difficult to deal with. At this time you will not be able to obtain any type of financing. Forget any new home mortgages, car loans, student loans, or any other financing available with the low credit score. But threes more to it then just waiting two years, you must begin to rebuild your
score as well.
This is NOT the end of the world and there are literally millions of people just like you in this same position. You are who you are because what you do and how you live. NOT by how high your credit score is! So, get up, brush off your knees and move ahead with your life.
Here are three easy tips to begin rebuilding your rating:
- Budget all of your monthly expenses. Make a plan on how you must spend your money in order to fit all of your financial needs. You will probably find there is many expenses that you can avoid.
- Continue to pay all of your other debts on time. By doing this you will slowly begin to regain your credit score.
- Apply for an affordable credit card. Use this card only to make small purchases so you are guaranteed to pay the payment each month. This will also help rebuild your score.
So even if you have gone through foreclosure there is still hope. Do everything you can to rebuild your credit score back to normal.
Or you can do what many Americans are doing and just forget credit and getting into debt all together. Live on cash and live within your means is the new fad. Imgine that?
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