You may think your credit is doomed after having your home foreclosed on. A short sale or foreclosure is something no home owner wants to have on their credit report. Neither is an end-all when it comes to purchasing power. However, either a foreclosure or a short sale will require some credit repair.
How to Rebuild Your Credit After a Foreclosure
The first step is putting your short sale or foreclosure in the past. You need to move on past it. It is unfortunate that it happened, and it isn’t going to look good on your credit report. It will hurt your credit score. However, it is not the end of the world. The short sale or foreclosure will stay on your credit report as a negative reminder. However, that does not mean you can’t build positive activity beyond it. The goal following a foreclosure is to build enough positive activity to make the negative mark look like a blip on the radar. So, what is the best way to achieve this.
Immediately start working on at least three positive lines of credit. A secure credit card, personal loan, or any other type of account. These lines of credit are ideal opportunities to build positive activity. Since the FICO score weighs behavior on making timely payments, credit history, and credit utilization, you can put the negative marks in the past by building positive activity. If you have a positive account open account, keep at it. As we’ve stated before the best way to build positive credit is to make on-time payments and keep balances low.
By following this process, following a short sale or foreclosure, it’s not uncommon to see a significant improvement in your credit score within as little as six months. It may even be possible for those with scores in the low 500s to see their scores increase into the high 600s or even 700s. Just keep in mind, this is not a quick fix and will take time.