credit score

You can fix your credit!

Whether you have suffered a foreclosure or were able to short sale your house, your credit standing has been damaged. I know, some of the following suggestions are obvious. Some of these may be difficult to carry out if your problem is not enough money at the end of the month. Hopefully, you still have some of the money you saved from when you weren’t making mortgage payments, because the sooner  you begin applying this advice…well you know the rest.

Implement these as soon as you are able:

Pay bills in a timely manner: The easiest way to avoid blemishing your credit report with late payments is to know when your bills are due and pay them on time. Put them in a special place when they arrive. Even if your creditor offers a grace period (and many don’t), make an effort to pay your bills before the due date. Keeping accurate records of these dates ensures that you’ll never make a late payment.

  1. Challenge errors: If you find an error on your credit report, don’t let it languish. Immediately request that the error be investigated by writing to the credit bureau that issued the report. (this really works)Federal law requires that the disputed item must be removed from the report if the credit bureau fails to respond in the 30 days it has to conduct an investigation. It is also a good idea to write to the creditor regarding the item in dispute. If you don’t challenge these errors, they will remain on your credit report and continue to damage your credit rating.
  2. Keep track of how long negative items are reported: Seven years is the maximum amount of time that negative information can remain on your credit report. Nevertheless, reporting credit problems well after they have occurred is one way some creditors bypass this time limit such that a debt that is 10 years old might be reported as a two-year-old debt. Again, contact the credit bureau in writing and explain the situation to get this erroneous information removed from your credit report.
  3. Very important, add a personal statement: Consumers have the right to add a personal statement to their credit report that explains to future lenders the extenuating circumstances surrounding late payments and other negative items in the report, giving them a better understanding of your situation.
  4. Pay off outstanding debts: Pay any debts that you still owe as quickly as you can. Pay the smaller ones first.
  5. Acquire a major credit card: Even if your credit is not the best, it’s not impossible to get a major credit, which you will need to rebuild your credit rating. A secured credit card may be your only option at first, but be sure to protect yourself by thoroughly researching these cards before choosing one.

Because a potential mortgage lender may view you as a risk not worth taking if you have multiple credit accounts, open only those accounts that are absolutely necessary. In addition, debt consolidation services (as opposed to consolidation loans) are to be avoided, in my opinion and according to many consumer advocates. A mortgage lender may even ask you to close one or more accounts if you have less than sterling credit before approving a future loan. Even though closing accounts won’t raise your credit score, it assures the lender that you’ll be able to make loan payments because you are of course carrying less debt.

Because lenders know that most people can improve their credit reports and scores, they are generally willing to help them do so.  Consider yourself a knowledgeable consumer if you make the effort to project a positive financial image on paper. Anything you can do to improve this image in the eyes of a lender can only help you acquire the mortgage that will get you into your next  home. As you know a free annual credit report is available to every consumer without penalty to your credit report or score. Make sure to get your copy by visiting the Federal Trade Commission’s AnnualCreditReport.com and begin regaining control of your financial future today.

Find out if a Utah short sale is your best course of action by calling us at 801-718-6156, or if you prefer, fill out the form on the right. We can usually get back to you within 24 hours.

You may also want to read 100 Ways to Help Prevent a Utah Foreclosure

Photo Credit: Flickr

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Filed under: Utah Foreclosures

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