How to Rebuild a Credit Rating After Foreclosure

A foreclosure is devastating on many levels, including to your credit. Having a foreclosure on your credit report has a large negative impact on your score and your ability to get credit in the future. However, your credit is very dynamic and the foreclosure, while initially devastating to your credit, will eventually fade and in seven years will be removed. As long as you keep any other credit accounts in good standing, your credit will recover from the foreclosure.

Instructions

1

Maintain all your other accounts. Because getting new credit after a foreclosure is tough, maintaining any other credit accounts you have and keeping them in good standing is critical to rebuilding your credit. Keep credit cards, auto loans and other lines of credit paid on time and under their assigned credit limits at all times.

2

Establish new credit. This is a particularly tough endeavor, but is essential to helping you rebuild your credit after a foreclosure if you don't have any other trade lines. You will most likely only be able to obtain small loans and credit cards with higher interest rates and low limits at first, but as long as they report to the credit bureaus, they will help. Another option is prepaid credit cards. These cards are available to anyone as there is no credit check since they require you to make a security deposit in a holding account before they will issue you a card. They report to all three credit bureaus.

3

Take your time. The old adage that time heals all wounds also applies to your credit report. The foreclosure will fall off your report seven years after the process has completed. Take this time to ensure that all of your accounts are in good standing and that you are contributing money to a savings account. Having money in the bank will help you obtain a new mortgage or make other large purchases while you are in the process of rebuilding your credit.