Repairing credit after a foreclosure: Part 2
Have you faced a foreclosure of your home? Small personal financial steps can make a big impact on your credit score.
A foreclosure on your property can be a devastating event in a person’s life, but it does not mean the end of your financial future. There are steps to take to regain the financial trust of lenders as well as to improve your own personal finances.
Steps to financial stability begin with some small but very important actions. Begin by asking if you can start rebuilding your savings account. Even small amounts of money going into a savings account begin to provide a defense against future financial problems. Savings accounts are an important part of any financial recovery.
Even though a person has been through a negative financial event, they are likely to receive ongoing credit card offers. The problem with these offers is they contain very high interest rates on the account. Work to decrease reliance on credit cards. If a person uses a credit card, make sure it can be paid off monthly. Paying it off monthly will help to increase a credit score by showing a vendor you can manage credit again. You may also have to work with your past creditors to pay off any unpaid debts not addressed due to the foreclosure situation.
A third, but very important step to complete is to develop a monthly budget or spending plan. A monthly spending plan guides you in making conscientious financial decisions. It prioritizes the bills that need to be paid first, and lets you manage the discretionary spending that can side track spending.
Other steps to take to rebuild your credit include checking your credit report to make sure it is accurate. You can check your credit report for free at annualcreditreport. Work to resolve any credit disputes you may have had with the credit bureau or with the creditor. Cancel any credit cards that you do not intend to use so you will not be seen as overextended.
Opt out of pre-screening credit card offers by going to http://www.optoutprescreen.com or by calling 1-888-567-8688. (Surviving Debt, 2013 Edition, National Consumer Law Center.) It is important to reduce your reliance on credit for several years after a foreclosure. The best way to do that is to plan your monthly spending before each month and stick to your plan, and MI Money Health from Michigan State University Extension can help you every step of the way.
Other articles in this series: