Everyone knows that when you lose your home through foreclosure, your credit is going to take a hit. It is going to be visible on your credit report for years to come. For this reason, you really should do everything that you can to stop the proceedings. You might be able to talk to your mortgage company to find a way to keep your home. Though it might not feel like it, they want you to stay in your home also. Foreclosure proceedings are costly for them too!
If you have already gone through (or are going through a foreclosure), here are some ways to help to improve your credit.
First of all, you have to figure out what went wrong. Why were you struggling to pay your mortgage? Did you take a pay cut with a new job? Did you lose your job? Were you spending more money than you made? By figuring out what mistakes you made, you can make sure that you don't make the same ones again.
If you are in debt, start working hard to pay these off. Though debt can be overwhelming, now is the time to get rid of it. The best way to do this is by paying off the highest interest debts first and then work on paying off the rest. To get this done sooner, you might find some expenses that you can cut back on. If money is truly tight, a second job can help you get rid of your debt quicker.
Get your debt-to-income ratio back to a manageable amount. Mortgage companies and other lenders like to see a debt-to-income ratio. If you have no debt, they might wonder if you can handle it. If you have a small debt-to-income ratio, it shows that you are managing your money wisely. The goal is to get below 35 percent.
It takes time to improve your credit score after a foreclosure, so you need to learn to be patient. You are not going to go right back out and buy a home. Instead, you are going to have to continue to show creditors that you can handle debt wisely by paying off your credit cards and other debts on time. However, with the right dedication, you will get back on your feet.
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