For many people these four things can spell catastrophe for their credit. However, what most people don’t know is that you can rebuild your credit. Bankruptcy, Foreclosure, Short Sale, and Divorce do not ruin your credit forever. While it’s important to know that they can lower your credit score dramatically, there is hope. Keep in mind that credit impact from divorce can be a little more complicated. While this topic may be a sore spot, just know that not all is lost and that a professional will be able to help you address your specific issues.
To repair credit after a catastrophe, your local credit union or bank is a good resource to seek advice about how and when to reestablish credit. These institutions will be able to talk to you about the tools they offer to help build or repair credit.
In general, credit cards offer the most long-term, sustainable source for credit improvement. Credit cards usually stay open and active as long as you use them. Short-term loans also help build credit, but once they are paid off, they do not offer an active source of credit. If your goal is to buy a home, open and active lines of credit are often essential. Your local credit union or bank can help you find a credit card to build credit. Many offer a ‘secured credit card’ for those with bad or no credit. A ‘secured credit card’ is secured by a specific amount of your savings. This provides the bank with security and you with a way to build credit.
Remember, not all is lost.
You can rebuild your credit after a catastrophe. To rebuild credit you need:
- Open and active credit lines – Credit cards from a bank or credit union will serve this purpose well.
- Time – Building or rebuilding credit takes time. There is no magic wand that will fix everything in a snap. Rebounding from bankruptcy, foreclosure, short sale, and divorce will take time. However, good credit will help you get good rates for many important purchases such as a home, auto, home insurance, and car insurance.
There is no better time than today to get on track and work towards your goals! Find an organization in your community to help you get started today! If you’re not sure where to begin, Homewise can help. Call us at 505-983-9473 and ask to speak to a Home Purchase Advisor today.
Are you facing a credit catastrophe? What are you doing to make better financial choices?
Resources that may be able to help:
- Money Management International
- United South Broadway
- Hope Hotline
- Annual Credit Report – To pull one’s own credit free
FAQ from the three bureaus