How to Recover Your Credit After a Bad Mortgage

Getting stuck with a bad mortgage deal can potentially harm your credit score. You may have agreed to a mortgage loan with an adjustable rate, and then couldn't afford the payments once the interest rate increased. Mortgage problems can trigger defaults and perhaps foreclosure. But even if your credit score nosedived due to a bad mortgage, you can recover and rebuild your score.

Instructions

1

Increase disposable income to help improve financial problems. Discuss the possibility of mortgage modification with your lender to bring down your monthly payment on the mortgage, or move out of the property and rent another home with a lower monthly payment. Ask your lender about a deed in lieu or short sale if unable to sell your property.

2

Stay current on your other credit accounts to help recover your score. Even if you defaulted on your mortgage loan, you can slowly recover your credit score by paying other creditors on time each month.

3

Use your extra income to pay down your credit card debt and other loans. The monthly savings after modifying your mortgage loan or moving into a more affordable residence can help erase your outstanding balances. The lower your balances on credit cards, the higher your credit score.

4

Ignore new credit applications. Excessive credit inquires can cause a drop in your score. Do not apply for new credit cards or loans until you've repaired your credit score.

5

Keep an eye on your credit report to quickly detect inaccurate information. You can obtain one free report from each of the three bureaus annually by visiting the Annual Credit Report website. After acquiring your free reports, you can pay a fee to order additional reports directly from the bureaus as needed.