How to Improve Credit After Foreclosure

Losing a home to foreclosure can be devastating both personally and financially. A foreclosure is listed on a credit report for 7 years, but that doesn't mean you can't rebuild your credit and even own a home again before those 7 years have passed. The keys to improving your credit after foreclosure are diligence and hard work.

Instructions

1

Pinpoint the problems that led you to the foreclosure, so you can avoid those mistakes in the future. If you don't make positive changes, you may find yourself dealing with more financial problems, which will damage your credit even further.

2

Order a copy of your credit report from Equifax, Experian and TransUnion and carefully review the information, making note of any errors. Document each error in a letter and send that letter to the three credit agencies.

3

Write a statement to be published on your credit report that explains what forced you to go into foreclosure and submit that statement to the three credit agencies. Adding an honest statement to your credit report will show creditors that you understand what went wrong and are working to rectify your financial problems.

4

Pay all of your bills on time, or else your credit will plunge even further. Most banks have automatic bill pay, allowing your creditors to automatically withdraw payments from your bank account each month, an option you should consider to ensure all payments are made on time.

5

Rebuild your credit by ensuring that you have at least two credit cards open. Use the credit cards to make small purchases, such as groceries, then pay off the full balance.

6

Start paying back your existing debt. When your debt is high, your credit score will suffer even if you are doing everything else right, including paying all of your bills on time.

7

Create a budget and stick to it. With a budget, you will know how much money you have to spend each month on essentials and bills and how much you can reasonably afford to pay toward your existing debt.

8

Consult a credit counselor if you have difficulty controlling your finances. A credit counselor can teach you the money management skills you need to improve your credit.