How to Establish Credit After a Foreclosure

If you have just been through a foreclosure, the future can seem pretty bleak, at least when it comes to getting another house and repairing your credit. The good news is that with some diligence and a little hard work, you can completely recover from a foreclosure. Typically, you will need to wait three years before applying for a new mortgage, but this will give you time to fix your credit.

Instructions

Starting the Repair Process

1

Settle your debt with the bank. Often, after a foreclosure, the bank will require that you pay back at least some of what you owed. This is the debt you need to focus on first. If possible, get the bank to offer you a partial settlement deal or try to work out a payment plan that you can stick to.

2

Pay down your credit cards. You will need to keep your balances as low as possible. This will help your credit score go up since you will have plenty of available credit that you are not using. This is probably the best way to establish credit after a foreclosure.

3

Make all your monthly payments on time. This is a very vital step that will make a big difference not only in your credit score, but also with how future lenders will view you. Many times, underwriters will value a good payment history and weigh this against your past foreclosure.

4

Open a secured credit card. If you have defaulted on your credit card payments and the accounts have been closed, you will need to get one good payment history on your report to establish credit after a foreclosure. The easiest way to do this is to open a secured card, keep the balance low and make your payments on time.

5

Monitor your credit score. It is a good idea to keep an eye on your credit score when you are trying to establish credit after a foreclosure. Seeing the numbers go back up will help keep you motivated and provide you with incentive to keep trying.