When you’ve sustained a real estate set-back and lost your home to either a foreclosure or short sale, and bankruptcy may also be in your credit past, getting on the road to credit repair also puts you onto the road of reentering the real estate market. Getting your credit up to a point where you’ll be considered for financing again is a job you can do yourself. It’ll take time, patience and dedication, but in less than one year you’ll find your credit score starting to improve.
Credit Repair Companies
You can do anything for yourself that a credit repair company can do for you. Do not pay anyone to help you repair your credit. Avoid taking out a debt-consolidation loan as you’ll still have the debt. Concentrate on paying off all loans, individually and on time.
Know Where You Stand
Contact the three credit reporting agencies: Experian, Equifax and TransUnion, and request a copy of your credit report from each. This is a free service, available on an annual basis. An alternative is to order one report from one company, wait four months and order from the second company. You’re allowed one per year per company at no charge. You won’t get your FICO (Fair Isaac Corp.) score, or your credit score, but that’s not what you’re looking for at this point. Study the reports and file a complaint about discrepancies you find. The agency should clear the mistake within 30 days. The next credit report should reflect the correction.
Collection Accounts
Debts that are in the hands of a collection agency can be negotiated for settlement. Agree to pay a reduced amount and demand that the account be considered “paid in full” and the collection removed from your credit report.
Payments
Make all your credit card and other payments on time. Ask all vendors to put you on their automatic payment system. They’ll let you know how much they’ll be deducting from your bank account, and when. You set the payment date to coincide with the funds hitting your account. This eliminates all late payments from your credit report.
Secured Credit Card
If you’ve lost all your credit card privileges, get a secured card from your bank. Put a minimum of $500 in the bank and get that amount back in the form of a credit card. Make payments monthly, and don’t run the card up to its limit. Some lenders like to see 10 percent of the credit used on a rotating basis, and 90 percent of the credit still available, while others accept up to 50 percent credit usage.
Pay for Your Credit Score
After you’ve worked to improve your credit for at least a year, pay to get your credit score from one of the three reporting companies. It’ll take several years to see a large improvement, but getting your FICO score above 620 puts you back into the market for a new mortgage.
Source: Home Guides SF Gate
Photo Credits to the owner