Reestablishing your credit after a bankruptcy and/or foreclosure

Rebuild Credit

Re-Establishing Credit

If you recently went through a bankruptcy or foreclosure, you should seriously consider reestablishing your credit as soon as possible.  Your credit scores will definitely drop by more than 150 plus points after your file bankruptcy or have a foreclosure on your credit report.  The good news is that the sudden massive drop in your credit score is just temporary and will eventually go up as time goes by.  It might take a long time but it will naturally go up as your bankruptcy and/or foreclosure ages.  After a few years, although your bankruptcy and/or foreclosure record might be on your credit record, it will have little or no impact on your credit scores.   If you plan in buying a home in a few years, you should start reestablishing right away after filing bankruptcy and/or foreclosure.

Reestablishing your credit to prepare for a home purchase

If you are planning in getting a residential mortgage loan in the very near future, here are what most mortgage lenders require:

1. At least 3 credit tradelines such as credit cards and/or installment loans that have been established for at least a year.

2. No late payments after a bankruptcy or foreclosure.

3. Verification of rental income.  Make sure when you pay your rent payments that you pay via check.  When it comes to applying for a mortgage, the mortgage lender will ask you for cancelled checks.

4. No overdrafts or bounced checks in the past 12 months.

Quickest way of reestablishing your credit

The quickest way of reestablishing your credit is not by hiring a credit repair company, but by establishing new credit via the use of secured credit cards.  Getting a unsecured credit card after a bankruptcy and/or foreclosure will be next to impossible to get approved.  However, getting up to secured credit cards will definitely boost your credit scores.  Three secured credit cards is the optimal number.  Anything over three credit cards will not have more effect.  Each secured credit should boost your credit scores by at least 20 to 30 points for a total of 60 to 90 points with three secured credit cards.

Secured Credit Cards To Improve Your Credit

If you are timely with your three secured credit card payments for six months to a year, the secured credit card companies will raise your credit limit without having you deposit additional funds.  After a year of having a timely historical payment history, you will be able to apply for unsecured credit cards.

Hiring credit repair companies

You can also hire credit repair companies to help repair your credit and improve your credit scores.  All of your derogatory information on your credit report will be posted on your credit report for a period of 7 years.  As time ages, the derogatory information will have less impact on your credit scores but the negative item will remain unless you repair your credit.  Anyone can repair their own credit but for those who do not have the time to tackle such task, they can hire a credit repair company to dispute the errors on their credit report and possibly derogatory information from their credit reports.  Please check our Sponsor list of credit repair companies.  One of the most reputable credit repair companies in the United States that Gustan Cho Associates endorses and uses all the time is Credit Fix Advisors .  Credit Fix Advisors website is www.creditfixadvisors.com .

Related> Mortgage Rates And Credit Scores

Related> Secured Credit Cards To Improve Credit Scores

Related> Re-Establishing Credit

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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