A foreclosure happens when you have fallen behind in payments on your home loan.
It is possible to remove a foreclosure from your credit report. We will show you how to do so as well as ways in which you can build up your credit again.
Removing a foreclosure from your credit report
There are several steps you can take to have a foreclosure struck from your report.
Ask for the credit bureaus to send you a copy of your credit report. Look for any mistakes. Write to the relevant bureau when you identify an error. You will need to submit evidence supporting your claim about the mistake.
The things you should pay careful attention to are the dates, name of the lender, and account balances.
Contact the lender
You also need to let the lender know of any mistakes you have identified. Send them similar details to those you submitted to the credit bureau.
Once notified of the error, the lender has to investigate the situation and send you verification.
Use a credit repair company
Credit repair companies have the experience and the knowledge to get items removed from your credit record. It is an ideal option if you lack the confidence or time in doing the process yourself.
They contact the credit bureaus on your behalf.
How does a foreclosure affect my credit?
When a foreclosure is on your credit report, it can stay on there for seven years.
Foreclosures can negatively affect your credit score by 160 points. On top of that, you will find it harder to be approved for new credit. If you do get approved, you can face higher interest rates.
Additionally, you may be required to come up with a large initial down payment if wanting a vehicle or house.
How to improve your credit score
Though you may have a foreclosure on your credit report, all is not lost. There are a few things you can do to build up your credit.
Focus on your existing debt
Look at how you can manage your current credit accounts. Avoid over-extending yourself. Pay off the debts with the higher monthly commitments as soon as you can. Then you free up money in which you can service the other credit accounts.
Avoid new credit
Every time there is an inquiry on your credit history, your score drops by up to five points. That mark remains on your credit score for 2 years. Though this isn’t something to be too concerned about, multiple inquiries about your credit can soon add up.
Pay on time
A foreclosure happens because you have failed to make timely payments. With your existing commitments, make sure that you pay on time. If you think you are going to struggle to do so, then talk with the creditor concerned and see if you can come up with a solution.
A foreclosure on your credit report can be disputed if you think it is inaccurate. If it’s a valid entry you can try to reduce the impact it has on your credit score. Foreclosures can reduce your score by 160 points.
Pay off your current debts as quickly as possible and avoid new credit. These are a couple of ways in which you can improve your credit.