Better your credit to get a mortgage after foreclosure

Description: If you want to qualify for a mortgage after foreclosure, you would need to improve your credit score.

If you have been hit by a foreclosure and you feel that obtaining a mortgage after foreclosure is an impossible task then you’re wrong. You can qualify for a mortgage after 2-3 years given that your credit score improves satisfactorily. When you start making timely payments on your bills, your credit score would gradually show signs of improvement. A better score would always help you qualify for a mortgage after foreclosure.

The precise amount of time it would take to be eligible for a mortgage after foreclosure once more is dependent on a number of factors like your income, debts and other things mentioned on your credit report.

Obtaining a mortgage following a foreclosure would be simpler if you take some positive steps to make sure that your credit is restored. Given below are some tips that would help you restore your credit and boost your chances for a loan.

Restoring your credit

Collect copies of your credit report from all three major credit bureaus. You’re entitled to get one report for free every year from each of these bureaus by law. In addition, you can receive one report free of cost if you have just been refused credit. If you have been declined, you would get a communication that would inform you how to receive your free credit report.

As soon as you get your credit report, you must go through it to find out which accounts have been enumerated as late. You should stress on these accounts in the beginning. You understand that these creditors inform delayed payments to the credit bureaus so ensure that you pay them promptly hereafter.             

Subsequently, try to repay your outstanding credit card debt. Banks and lenders use a ratio called debt to credit ratio that compares how much credit is available to you with how much you’ve utilized. They judge how sincere you are with your debt payments. It doesn’t seem so good if all your cards are close to their limits. Lenders always prefer to see a low debt to credit ratio. Hence, you should try to maintain your revolving debt to below 30% of the available balance. This would help you better your score. Pay off the cards but don’t close the accounts.      

Summary

Keep in mind that there are three things you must do to better both your score and probabilities of qualifying for a mortgage after foreclosure. First of all, you need to work on your credit score. Secondly, pay off your cards to lower than 30% of the available balance. Lastly, make sure that your income and loan payments enable you to fulfill the debt-to-income ratio guidelines of the lender.