There’s no sugar coating it: Going through foreclosure, bankruptcy or debt collection is unpleasant. When going through financial problems, it may seem like things are far from getting better, but having a few bad marks on your credit history doesn’t mean you’ll never bounce back.
Eventually, negative items will age off your credit report, but you don’t have to wait for a clean slate to rebuild your credit standing. Seven or 10 years feels like a very long time, and it is, but keep in mind there is a light at the end of the tunnel. You can start seeing improvements sooner, if you start working on it.
Bad Credit Doesn’t Last Forever
Most negative information stays on your credit report for seven years (bankruptcy may remain on your report for up to 10 years), and depending on what the tradeline is, its effect on your credit may diminish even sooner.
For example: After a year, a late payment won’t hurt your credit score as much as it did when it first showed up on your credit report. Another year goes by, and it matters even less. On the other hand, things like debts in collection, foreclosure and bankruptcy are considered more serious indicators of risk.
While it means it may take longer to rebuild your score, you can absolutely rebuild it. Even the worst financial missteps can be recovered from in a reasonable amount of time, if you begin to practice the basics of good credit management.
How to Bounce Back From Bad Credit
Even with some of the most damaging records on your credit reports, you can make improvements to your credit scores by making loan payments on time, keeping your credit card balances low and applying sparingly for new credit.
You’re not forced to sit on the sidelines just because you’re going to have a piece of negative information on your credit report for several years. You can get your credit scores from the three main bureaus and monitor your progress as you rebuild your credit.
Keep in mind not all negative information ages off: Unpaid judgments and unpaid tax liens have the potential to stay on your credit reports indefinitely, so if you’re dealing with either of those things, do what you can to take care of them.
Getting a home loan with a bankruptcy or foreclosure on your credit report likely won’t be anytime within the first two years, but it is possible to still secure credit. However, you will likely notice that the interest rates will be higher in this circumstance. A lot of loans will also depend on the economy at the time. If there are strong performances in terms of revenue from lenders, it becomes more likely. However, if lenders are only granting loans to customers with high credit scores, it becomes harder.
On top of that, remember your credit score isn’t the only thing lenders consider when reviewing you as a potential borrower. While the score is a very important part of getting credit, loan officers look at a variety of other things such as income, debt ratios, length of employment, etc. Don’t forget the importance of patience when trying to recover from financial setbacks. It will take time, but you can rebuild your credit.
Let the Bandy team refer you to experts who can help you with improving your credit score to prepare yourself for homeownership. Let our experienced professionals guide you through all your real estate needs that include home buying and home selling in Denver. Whether you’re searching for Parker Real Estate, Homes for Sale in Aurora or any of the other fine housing communities surrounding Denver, we are here to help you find your dream home. We will be there to help you every step of the way!
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Until next time,
Marianne Bandy, Team Leader
The Bandy Team
Keller Williams Park Meadows
BandyTeam.com - Denver Real Estate & Homes
720-466-3790
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