How to Build Credit After a Foreclosure

Losing your home to foreclosure is devastating, and you can expect your credit score to decrease. It's difficult to obtain new lines of credit after a foreclosure. And even if you're approved for another home loan, the lender will likely charge a high rate, which amounts to a higher mortgage payment. However, the effects of a foreclosure don't last forever. There are ways to build credit after a foreclosure and re-establish a good credit rating.

Instructions

1

Request your credit score and credit report from Annualcreditreport.com. This will allow you to assess the damage to your credit rating.

2

Apply for a secured credit card. Secured credit cards require a security deposit, and they're designed to help people with bad credit and no credit history develop a good credit rating. Contact your bank or another credit card company and apply for a card.

3

Pay your creditors. Late and skipped payments reduce your credit score. To build credit after a foreclosure, resolve to pay your creditors on time. If possible, submit payments days or weeks before the due date, or sign up for automatic bill payment to ensure timely payments.

4

Maintain low balances. Maxing out credit accounts and carrying high balances reduces your credit score. If you want to rebuild credit after a foreclosure, pay off or lower your existing credit card balances. This adds points to your credit score.

5

Use a co-signer. Applying for a small bank loan or financing an automobile can help you build credit after a foreclosure. Ask someone with a good credit history to co-sign the loan. This increases your approval odds, and the lender may offer a lower interest rate.