How to Fix Credit After Rental Foreclosure

Repairing credit after losing your rental property to foreclosure can be a daunting process, but it's both feasible and legal if you're willing to spend some additional money or wait for seven years for the foreclosure to drop off your credit report. Lenders are obligated to report accurate information to the credit bureaus under the Fair Credit Reporting Act (FCRA), but they aren't required to actually report any accounts. This means that any entries on your credit report, such as foreclosure, are open to negotiation.

Instructions

The Waiting Game

1

Consider waiting seven years for the foreclosure to drop off your credit report. This is the least directly expensive method of repairing your credit after you experience a rental foreclosure, but it will affect your ability to secure employment or borrow money during that time. If you wait, most other negative entries from your credit report, such as liabilities to tenants due to the disruption caused by the foreclosure of your property, will also be removed from your credit report.

2

Review your credit report after the account has been inactive for approximately seven years. Order copies of your credit report from all three major credit bureaus (Transunion, Equifax and Experian). The entry on your report should be automatically deleted by these credit agencies.

3

Dispute the foreclosure entry on your credit report if the bureaus have not deleted it after seven years. If you ordered your credit report online, you can send your initial dispute using the web form included directly on the credit report. Inform the bureau that the debt has expired and that the FCRA requires them to delete the entry. The bureaus are obligated to respond to your dispute within 30 days.

Rapid Credit Repair After Rental Foreclosure

4

Educate yourself about the financial position of your lender regarding your foreclosure to strengthen your negotiating position. Review the facts of the situation: once your home has already entered foreclosure, the lender will have written off the loss and likely sold the property. The lender has little direct vested interest in maintaining a negative entry on your credit report. This makes it in their interest to delete the entry on your report in return for a payment.

5

Send a letter to the original lien holder requesting a "pay for delete" of the foreclosure entry in return for a lump sum payment. Depending on the size of the original mortgage, you may be able to secure an agreement to delete the entry for a payment of anywhere between $500 to $10,000 or more. It may seem like a large payment, but if you're attempting to get another mortgage, you may be able to save that amount of money by deleting the foreclosure in a matter of months.

6

Alter your payment offer to delete the foreclosure if the original lienholder isn't interested. As far as the lender is concerned, you're offering them a payment in return for an official alteration of your negative entries on your credit reports. The lender doesn't gain anything directly by maintaining that entry, but they will make some money if they accept your settlement. Don't send payment until you receive an agreement to delete the entry in writing.

7

Send payment to the original lien holder once you receive a written agreement in the mail to delete the foreclosure entry. Ensure that the agreement states that the deletion will occur between 10 and 30 days after receipt of payment. Check your credit report about 30 days after the deletion deadline to ensure that the lender held up their end of the bargain.