How to Rebuild Your Credit After a Foreclosure

build-credit-blueprints It is easy to adopt a fatalistic mindset after a foreclosure. Why focus on rebuilding your credit if it's already been trashed? This, however, is the worst thing you can do after such a devastating blow because it increases the time between foreclosure and credit repair.

Make a Financial Lifestyle Change

When you go on a diet, you run the risk of regaining any weight you've lost once you return to your old eating habits. The same goes for rebuilding your credit after a foreclosure. To avoid falling back into old patterns, change your financial lifestyle.

This means committing to paying bills on time, avoiding debt and managing your money responsibly. Once you adopt this habit, it will be much easier to rebuild your credit, regardless of foreclosure.

Although a foreclosure will stay on your credit report for seven years, it's not as bad as a bankruptcy (10 years) or unpaid tax liens (15 years) About.com

They say that any great undertaking requires a village, so don't be shy about asking for help. Your family and friends are great resources if they already possess excellent money-handling strategies, but you can also obtain assistance from a professional such as a financial counselor. It's like consulting a personal trainer or dietitian to achieve your desired weight.

Watch Your Pennies

One of the best ways to lose weight is to keep track of every calorie consumed and burned. By watching the numbers and paying attention to food, people discover which foods they should not eat and how to balance their meals. The same philosophy applies when you want to rebuild your credit after a foreclosure.

Keep your checking account balance current, take advantage of online banking, order your credit report every six months and develop a reasonable system for paying bills. The more you know about your finances, the easier it will become to manage them.

Establish a Positive Payment History

The longer you eat healthfully, the better you will feel. You might notice only small changes, but those small changes accumulate. When you try to rebuild your credit after a foreclosure, the same rule applies. Small victories become more noticeable over time.

Your best bet is to jump right back in the game as soon as you've developed good financial habits. This means establishing a positive payment history with creditors, no matter how small the effort. For example, you could apply for a poor-credit credit card, which might charge higher fees than a traditional credit card but will report your payment history to the credit bureaus.

Like losing weight, rebuilding your credit after a foreclosure will take time. It might seem impossible on occasion, but little by little you will notice a difference. Eventually you will rebuild your credit as long as you stick to positive financial decisions.

Steve Thompson