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If you are going through foreclosure defense, your credit score may be negatively affected for several years. You want to keep your home, but it may be necessary to adjust the principal or payment plan. In the meantime, it is crucial to have a good credit score to secure a new job or to purchase a large asset, including a new car. Repairing your credit score takes time and consistent financial payments. Be aware of your spending habits and start adjusting your daily expenditures for an increased credit score and more wealth opportunities. Credit Cards Help And Hurt Your Score You must stop using your credit cards. This basic truth helps you begin a credit rebuilding strategy. Increasing your debt only makes your credit score plummet. Credit agencies want a reasonable debt-to-income ratio. Ideally, the debt should be substantially lower than your credit limit. The best way to reduce your credit card balances is paying more toward the card with the highest interest. As this debt is paid off, you have less interest to cover and save money at the same time. Avoid opening or closing multiple credit card accounts as you pay them off. Keep all accounts steady on your credit report. Consistency helps your credit score increase over time. Be Honest With Your Situation Even as your foreclosure defense attorney works on your case, any negative strikes against your credit score remain for many years. For example, a bankruptcy reflects on your report for approximately seven years. Any accounts under collection or past due will be noted on the report for future creditors to evaluate. Be honest with yourself and concentrate on debt reduction. You do not need a high credit score as you reduce debt. The score is mainly used during large asset purchases. As you repair the score, the negative strikes are overshadowed with positive actions. Actively Rebuild Your Credit Through Payoffs Although it may seem counterintuitive, obtain a secured credit card after your foreclosure defense. These cards work differently than a standard credit account. Similar to a debit card, you place a specific money amount, such as $500, on the card. You use the card like a credit account, but you cannot charge more than your deposited amount. This payoff system is a strategy to rebuild your credit by showing good faith to creditors. In the future, it is safe to have one or two regular credit cards with little or no balances for emergency purposes. Keeping The Goal In Mind A low credit score happens to almost all consumers sometime in their lives. Take a hard look at your spending habits and create a budget. Stay on top of other debts, including student loans, to improve your score. Avoid more debt by living within your income means. Although the negative strikes remain, creditors see a history of good repayment options compared to a few anomalies. A foreclosure is not a death sentence for your credit score. Concentrate on your other financial commitments and the credit score slowly raises. If you would like more information or need legal advice on dealing with foreclosure, you are invited to call Litvin Law Firm at 888-964-3367.
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