How to Fix Your Credit After Foreclosure

Foreclosure means more than just losing your residence. You also lose significant points on your credit score and get a big black mark on your credit reports. Some lenders will charge you exorbitant interest rates on new accounts, while others won't work with you at all. You can't completely undo the damage caused by a foreclosure, but you can minimize its effects by fixing your credit in ways designed to bring your credit score back up.

Step 1

Remove as much negative information from your credit reports as possible. A legitimate, correctly reported foreclosure will remain on your reports for seven years, according to, but there may be other items that contain errors or are out of date. They must be removed if you dispute them and the credit bureaus can't verify them properly. Order free reports from Equifax, Experian and TransUnion via the federal website and dispute every mistake in the negative items, no matter how minor. Every item that is removed will bump your credit score up a little bit.

Step 2

Pay all of your remaining accounts promptly. Credit score provider Fair Isaac Corp. (FICO) explains that your payment history is the single biggest factor in your credit score, accounting for 35 percent of the total points. Creditors will be more likely to take a chance on you, even with a foreclosure in your past, if you have no current delinquencies.

Step 3

Maintain low balances on your accounts. FICO calculates the ratio between your available credit lines and the amount of credit you are currently using. Use as little as possible to fix your credit by improving the ratio.

Step 4

Add a statement to your credit reports explaining the circumstances of your foreclosure, the mortgage site advises. The Fair Credit Reporting Act gives you the right to submit your statement to the three agencies and they must add it to your reports. Creditors may view you more positively if they see a reasonable explanation for your foreclosure, especially if you have maintained good post-foreclosure credit.

Tips and Warnings

  • Your foreclosure will have less impact on your credit score as the years go by, according to FICO. It may have a big impact for up to three years, but creditors pay more attention to your recent activity and won't give an older foreclosure too much importance.

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