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February 13, 2023 | Debt,  Financial Literacy

Foreclosure Recovery

How to rebuild your credit after a foreclosure

A foreclosure is a traumatic experience. The shock and sadness of losing your home are just one part of it. There are financial implications as well. When you go through a foreclosure, your credit score takes a nosedive and that has far-reaching consequences. Thankfully, there are ways to build your score back up again. Here is how to do it.

Identify the Cause

Before you even start rebuilding your credit, you should first identify what led to the foreclosure in the first place. Look at your budget, your spending and saving habits, everything. Try to be honest with yourself. When you figure out where you went wrong, it’ll be easier to prevent it from happening again.

Pay Your Bills 

Make sure you’re paying all your bills on time. Paying bills on time will help improve your score over time.

Get a Secured Card

Sometimes when your credit takes a big hit, it can be difficult to get a credit card. If this is the case, open a secured credit card. These require a deposit and have a spending limit, but when you use them and pay them off in full every month, your score will improve.

Keep Ratio Low

Your credit utilization ratio is the second-most important factor in your credit scores. Keep your ratio below 30 percent (and lower if possible) to help raise your credit score.

Wait for It

The hardest part of rebuilding your credit score after a foreclosure is that it takes time. Be patient and do the work. If you do, you’ll find your score will slowly rise once again.

Content by Savvy Money

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