Improving A Bad Credit Score After Defaulting On A Mortgage And Losing A Home–How Are Troubled Homeowners Being Viewed?

For homeowners who have faced the loss of their home due to defaulting on their mortgage and facing foreclosure, bad credit repair options may be more difficult due to a variety of factors after they have landed on their feet and have gained some form of stability in their life. As foreclosures continue to be seen here in June, but reportedly at less severe levels due to setbacks that are still being seen from the robo-signing scandal months ago, there are sure to be more foreclosures in the coming months, particularly if unemployment remains high, and this will obviously necessitate homeowners explore bad credit repair practices if their score has taken a hit beyond simple foreclosure.

Yet, before exploring bad credit score repair, there have been some interesting reports that were released in the earlier parts of June which state that their are lenders who are finding that homeowners who may lose their home or even strategically walk away are being seen in a more favorable light, particularly if they keep other sources of credit current. While the aspects surrounding this particular situation have been troubling for some, as homeowners are seemingly being seen in a positive light even if they strategically defaulted, in cases where homeowners have stayed current on some of their debts even though they have lost their home, this may help in the bad credit repair process.

What it essentially boils down to though, consumers who may have lost their home and seen their credit score plummet as a result of their inability to pay off certain debts are in a situation where they must first find a stable financial ground for bad credit repair can begin. Obviously, paying off debts is the first priority of anyone who is in a bad credit position, as this can not only reflect well on one’s credit score but is vital to the bad credit repair process since consumers cannot affordably rebuild a low credit score when they owe money to various obligations like credit cards or car loans.

There are some advisers who suggest that consumers begin using current credit cards that are open, particularly those that may have the longest credit history, and this is one of the more typical and beneficial starting points for bad credit repair. Cards that have a long history can carry more weight in terms of a consumer’s ability to repair their credit score, so closing out credit card accounts after paying off these debts is usually a step in the wrong direction.

The problem though, that many homeowners face, is that a bad credit score is usually only repaired with the use of credit cards and proper repayment practices or borrowing loans and promptly repaying these debts as well. This is where some homeowners have gotten into trouble in the past, as using credit or acquiring debt after foreclosure may be more costly due to a consumer’s credit score taking a hit, but further damage can be done if a consumer cannot afford to pay off what they have charged or what they owe. While the bad credit repair process may be slow for some, homeowners who have lost their home and seen their credit score drop must begin the process slowly if they are not on a firm financial base as getting out of debt, acquiring small affordable debts that can be easily repaid, and eventually moving forward to show that more responsibility can be handled are the basics of bad credit repair after defaulting or facing foreclosure on a home.