Re-Building Credit After Foreclosure To Qualify For Home Loans

This BLOG On Re-Building Credit After Foreclosure To Qualify For Home Loans Was UPDATED On July 6, 2017

A foreclosure can drop credit scores by at least 100 points. However, the good news is that the drop is temporary. Credit scores will improve as the foreclosure ages. The sudden drop will eventually have little to no impact on credit scores as time passes. However, consumers and potential home buyers can expedite boosting their credit scores by re-building credit after foreclosure.

  • A foreclosure will remain on credit report for 7 years.
  • The good news is that a foreclosure is not the end of the world.
  • Millions of people have gone through a home foreclosure.
  • Those with prior foreclosures can have good credit and high credit scores by re-building credit after foreclosure.
  • Re-Building credit after foreclosure takes some time.
  • Even if nothing is done after foreclosure, credit scores will naturally climb up.
  • Credit scores will improve with passage of time.
  • Re-Building credit after foreclosure should be done as soon as possible.
  • One important factor to remember is that consumers should not be late on any monthly payments after foreclosure.
  • Mortgage lenders really frown on late payments after foreclosure.

Re-Building Credit After Foreclosure To Qualify For Home Loan

Home buyers who intend on purchasing a home again after foreclosure need to start re-building credit after foreclosure.

  • Start by getting 3 secured credit cards.
  • Each credit card should boost credit score by at least 20 to 40 or more points.
  • Try to get an auto loan or installment loan.
  • Never be late on any monthly payments.

Authorized User Credit Card

Another way of re-building credit after foreclosure is to piggy back on a family member’s credit card as an authorized user.

  • Make sure the credit card company of the family member will report authorized users to credit reporting agencies.
  • It will serve no purpose of being an authorized user on a family member’s credit card to improve credit scores and the credit card company does not report authorized users.
  • The reason I mention this is because there are some credit card companies that only report spouses who are authorized users to credit reporting agencies and not other family members.
  • Remember that the risk that authorized users inherit with being an authorized user.
  • Risks by being added on a family members credit card is that if the family member is late with a monthly payment, the late payment history will be reported on authorized credit report as well.
  • Late payments by main credit card holder will be reflected on authorized users also.
  • Authorized user late payments will plummet credit scores the late payment record will be reported on credit report.

Credit Scores Determines Mortgage Rates

Re-building credit after foreclosure is not all that difficult. Re-building credit after foreclosure does take time and patience.

  • Remember that credit score determines mortgage rates.
  • Credit Scores determines insurance premiums.
  • Good credit can be a factor in getting a job or promotion.
  • Many companies in the United States run credit checks as part of their hiring and promotion process.
  • All mortgage loan originators in the United States have to submit to annual credit background checks in order to validate their mortgage licenses.
  • A very poor credit score signals employers that the individual is not financially responsible.
  • However, we all know that there are periods of people’s lives that having perfect credit all the time is not possible.
  • There are extraordinary circumstances that happen like job loss, medical problems, and divorce that cause financial hardships.

Related> 2015 FHA Minimum Credit Score Guidelines to Qualify for Home Loan

Related> Improve credit scores to qualify for home loan

Related> Minimum credit scores for mortgage loan programs

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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