How to Improve a Credit Score After Foreclosure

No one can say for sure how much a foreclosure will affect your credit score. The website MyFICO.com calls it only "a very negative event," with the impact lessening over time. People with great credit other than the foreclosure may bounce back more quickly than people who also have had other credit issues.



MyFICO.com says a common misconception is that a foreclosure will ruin your credit for a very long time. The site says your credit score can begin to rebound in about two years.

Instructions

1

Pay your remaining credit accounts on time. Never missing a payment on your accounts can show creditors that your foreclosure was an isolated event, if that was the case.

2

Resolve any other delinquent accounts by making payments. In your efforts to save your house you may have defaulted on other accounts, such as credit cards. Improve your credit score by addressing all charge-offs, collection accounts, judgments, liens or other problems.

3

Apply for new credit. Establishing new credit lines with positive payment histories will help offset some of your bad credit, if applicable. Unsecured credit may be hard to come by immediately after a foreclosure. If you are turned down for unsecured credit, apply for a secured MasterCard or Visa credit card from your bank or credit union. A required deposit into your savings account serves as collateral, and your credit line will equal the amount you have on deposit. The collateral makes the account easy to qualify for, and you'll improve your credit score over time as you keep your balance low and make timely payments.

4

Get a secured installment loan and a second secured credit card after several months. An additional deposit into your savings account should also make it easy to qualify for the installment loan. Deposit the proceeds from the installment loan into your savings account and authorize the bank to withdraw the monthly payment automatically. Continue making regular payments on all your accounts for 12 to 24 months as you improve your credit score following the foreclosure.