Picking up the pieces after foreclosure

Going through a foreclosure is definitely not a walk in the park for anyone. Apart from having to go through the nerve-wrecking experience of wondering if you will still be able to keep your home, being issued a notice of foreclosure can have some damaging effect on your credit score and standing. This would, in turn, greatly affect your ability to take out any form of financial aid in the future.

While the most ideal way to ensure that this doesn’t happen is to make sure that you make the payments on time to your creditors and other financial institutions with whom you have outstanding debts, the current financial situation being faced by the average American in the United States has made this highly unlikely to achieve. Due to the current financial crisis experienced all over the world, prices of even the most basic commodities are now on a steady rise. Unfortunately, salaries in the United States have not risen. As a result, more and more Americans have now been subjected to the harsh realities and experiences of going through a foreclosure.

The first thing on the minds of anyone who has gone through a foreclosure is how to pick up the pieces and re-establish a credit score and ranking. If you are one of the thousands of Americans thinking of the same thing, here are some steps to help you repair the damage inflicted by a foreclosure experience on your credit score and ranking.

Know where you stand
The very first thing that you need to repair your damaged credit score and ranking is to first determine the severity of the damage. Credit reports are public records, meaning that you can easily request a copy to help you know how to deal with your damaged credit score and standing resulting from a foreclosure. For a minimum charge you can get a copy of your credit standing over the Internet or have it delivered to your doorstep via regular mail.

Seek sound advice
Unless you have some solid background in accounting, reading and understanding a credit report can be rather difficult to do. This is why it is extremely important to seek the advice of someone who would be able to explain to you the different figures and terminologies provided in the credit report that you have either downloaded or have had mailed to you. If you have the budget to seek the advice of a professional accountant or financial adviser, it would be a good investment on your part to seek their advice since they would be in the best position to provide you with the right steps to take to get you back on your feet. You can also find a number of helpful articles over the Internet to guide you on how to properly read through your credit report and get a foothold on how to go about repairing your credit score and standing.

Do not delay
Repairing your credit score and standing does take some time to happen. So, the sooner you can begin repairing it, the sooner you can get back a good standing with creditors and other financial institutions. Slowly pay back any other debts that you may still have existing.

Having a good credit standing does not necessarily mean that you need to wipe out all of the existing debts right away. In fact, it would be a relief on your part to discover that you do can have a few negatives on your credit reports and still have a good credit standing to allow you to get financial aid in the future. The important thing is that you have enough positive credit in your credit report to neutralize the effects on any negative credit in your report. This is a lot easier than you might think because of the fact that all daily financial activities have an effect on your credit standing. Some of these include the amount and frequency of the premiums that you pay for your insurance policies and even the position you have at work.

Keep your credit cards
A common misconception by many people who are trying to pick up the pieces after a foreclosure is to cut back on the number of credit cards they have under their names. In reality, doing this would only lower your credit score and standing even further. This is because when you minimize the number of credit cards you keep, it decreases the total credit limit you currently have. This high credit limit, which is a form of unsecured debt, can actually help you rebuild your credit score and ranking in no time. Keeping your high credit limit would have a different effect on your debt to credit ratio, which is one of the things that creditors and financial institutions look into when they check your eligibility for a loan or mortgage you may be applying for in the future. The debt to credit ratio in your credit report provides creditors and financial institutions with the amount of money you have borrowed previously and the amount of interest being applied on the amount you have been loaned. In order to ensure that you have a good credit standing, your debt to credit ratio should be between 10 and 30 percent.

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