If you have gone through a foreclosure in Michigan, chances are that you are incredibly distraught about how it will affect your credit. You are not alone; After sub-prime and adjustable rates for mortgages spiked, many Americans were not able to make the payments or refinance their homes for a lower rate or smaller payment. A foreclosure is a serious blemish on a credit report, much like a bankruptcy. According to www.myfico.com, while the impact of the foreclosure to a FICO score will lessen overtime, a foreclosure will remain on a credit report for 7 years. In order to repair your credit, use these few tips.
Get the Report
It may not be the first thing you want to look at for encouragement, but your credit report will give you a better idea of where you are starting on the rebuilding process. Not only will you be able to see the effects of the foreclosure, but you will be able to see how much cushion the rest of your credit report is providing. Every year, Americans are entitled to get their free credit report from each on the three national bureaus: TransUnion, Equifax, and Experian. Websites, like www.annualcreditreport.com, are there to give you the free credit report. It is crucial that you verify every section of the report because many companies do not notice their errors, and inaccuracies can be hurting your chances at repair. Michigan Consumer Credit Lawyers can help successfully deal with any debt collectors, so face any problems head-on instead of ignoring them.
For an annual credit report: Go Here
Pay the Bills
In Michigan, a foreclosure is just one mark on your credit report. It may be a negative spot, but if you continue to pay your bills and do not default on other credit obligations, a FICO score can rebound in as little as two years. It is a misconception that a foreclosure will entirely ruin the score. Late payments are what will ruin a score. Do research on the companies sending you bills, and try to uncover their policy on reporting missed payments or defaults. If you are strapped for money, it obviously makes more sense to concentrate on the companies that quickly report late payments. Credit.com explains that if you are 30 to 60 days late, it might be okay if it is one isolated incident, but if the foreclosure is also on the credit report, it begins to look suspicious. When the payment is 90 days late, that is when it becomes the equivalent to a serious mark because it can last up to 7 years. If the account is “charged off” or sold to a collection agency, it will damage the score and show up on the history. Equifax.com recommends that you make a budget plan to have an idea of how income can be best spread across the bills.
For more information on late payments: Go Here
Consider Credit Unions
According to www.mycreditunion.gov, credit unions are not-for-profit organizations. Like banks, you can deposit your money and receive loans from a credit union. However, a credit union is member owned, and it uses dividends to return its surplus income to its members. Most people use credit unions over banks for many reasons:
- They are less likely to try and sell additional products.
- Fee and loan rates are generally lower.
- Interest earned on saving accounts/time accounts is generally higher.
- They are federally insured and regulated by the National Credit Union Administration.
Therefore, a credit union is more dedicated to its members and more likely to personally help you rebuild your credit. If you have to apply for more credit, visit a personal banker at the credit union to discuss rates and payment options. Be honest and up-front about your history.
Credit Cards and Secured Cards
Some credit cards will close after a foreclosure. Continue making all of your credit card payments because being able to keep a card open gives you a way to use credit and pay it back, therefore helping you to rebuild it. If the credit card company contacts you wanting to raise your rate, do not be afraid to use the fact that you have been making regular payments as leverage for negotiations. Also, apply for a secured card. A secured card is easier to get approved for because the bank/credit union will take a deposit equal to your limit for security. A secured loan or line of credit follows the same concept, and may even build your credit score faster. To compare different cards, look at www.creditkarma.com, which lists the pros and cons of each.
For more information on secured cards. Go here
Do not increase your debt if the income simply is not there to pay it back. Repairing credit after a foreclosure in Michigan is difficult, but not impossible as long as you have a good plan.
If you see errors on your credit report, call or email Attorney Carl Schwartz for a free consultation at (888) 293-2882. For more information about your credit rights as a consumer, visit our website at www.micreditlawyer.com for informative, how to videos on consumer financial protection.