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16 January 2013

Credit Score Tips After Foreclosure

Credit scores can be a mysterious topic.  Why is my score low? Or why is my friend’s score so high when they are unemployed and have student debt?  Many people come to the conclusion that the credit scoring system is unfair and something that can’t be fixed.  Don’t settle for a low credit score.  There […]

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Credit scores can be a mysterious topic.  Why is my score low? Or why is my friend’s score so high when they are unemployed and have student debt?  Many people come to the conclusion that the credit scoring system is unfair and something that can’t be fixed.  Don’t settle for a low credit score.  There are several things you can do immediately to boost your credit score after foreclosure.

Here are some credit score tips for after foreclosure:

1.  Don’t carry high balances.

This is one of the biggest score squashers that is often overlooked.  About 30% of your score is derived from the proportion of your balance to your limit.  If you are using more than 50% of your available credit, it can hurt your score greatly.  Pay down those balances and keep them low.

2.  Check your credit report often.  

Collections and errors on your report can cost you 100 points or more.  If you pay off a collection, it doesn’t mean your score will improve much. In fact, often it can hurt it.  If you have an older collection it may not be hurting your score that much and if you pay it off, the collection agency may update the report to show a “paid” collection.  This brings the date of the collection up to the present date which can cause the score to drop.  What to do?  When you are speaking to the collection agent, tell them you want a letter of deletion if you pay it off.  They will most likely accept this because their main concern is getting paid.  Have them agree to this and follow up with them to get the letter emailed or faxed to you.  Once you have the letter, there are ways to send it into the credit bureaus to get it updated.  OptimalCredit.com can help with this.

3.  Get your credit report optimized!

Talk to a licensed and bonded credit report professional to see if there are any errors reported on the foreclosure or short sale.  As you can imagine, with the robo-signing scandal and lenders rushing through foreclosure paperwork, they made some mistakes.  It is common for there to be reporting errors as well.  If this is the case, it could be cause for you to have the foreclosure or short sale deleted altogether.  This could boost your score 100 points or more!

4.  Adding yourself as an authorized user to a family member’s credit card.  

If you have a parent or a close sibling, adding yourself to one of their credit cards that has a long history could greatly benefit you.  They may be apprehensive in doing this, however you can always assure them that you won’t go charging up their card.  You can even simply cut up the card when it arrives in the mail.  There is risk involved.  If, for some reason, they run into financial trouble and max out the card, it could also adversely affect your score.

The most important thing to know is that there are safe ways to optimize your credit and raise your score.  Visit OptimalCredit.com for more information.  Take charge of your credit and financial future!

 

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