May
4

5 Ways to Deal with Underwater Credit Problems

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One side effect of the mortgage crisis has been an increase in the number of people dealing with underwater credit problems after a foreclosure or short sale. Losing your home will definitely have a negative impact on your credit score.
- Homeowner 101, May 4th, 2012

Published May 4th, 2012


5 Ways to Deal with Underwater Credit Problems

Click for more info: http://homeowner101.com

One side effect of the mortgage crisis has been an increase in the number of people dealing with underwater credit problems after a foreclosure or short sale. Losing your home will definitely have a negative impact on your credit score. Fortunately, there are steps you can take to deal the negative effect of a foreclosure or short sale on credit.

1. Keep your existing lines of credit open.
One important thing you can do as you recover from your underwater credit problems is to keep any existing lines of credit open. That's important for two reasons. Not only will it be more difficult for you to get credit after a foreclosure or short sale, but closing accounts will actually lower your score.

2. Develop good bill-paying habits.
As you know, falling behind on your bills will hurt your credit score. Since you're already dealing with the negative effects of foreclosure or short sale on credit, don't make things worse by falling behind on other payments. Instead, demonstrate that you are financially responsible by paying bills on time, which will help boost your credit score.

3. Pay off other debts. Having a lot of other debts won't help your credit score.
As you evaluate your underwater mortgage options, consider your other debts and think about developing a strategy for paying them back quickly in order to boost your credit score.

4. Regularly review your credit report.
If your credit report contains inaccuracies or errors, those could negatively affect your credit score. Request a free credit report from each of the three credit reporting agencies once a year, and review it for mistakes. If you find errors, take prompt action to have them corrected.  

5. Develop financial discipline.
Maintaining good financial habits is a key aspect of increasing your credit score. Of course, many responsible homeowners were simply unluckythey ended up with underwater mortgages through no fault of their own. Whatever your specific situation, however, developing good financial discipline (regularly saving, avoiding credit card debt, etc.) can help you avoid problems in the future. In any case, having positive financial habits will help you quickly repair your credit score.

Repairing your credit after a foreclosure or short sale won't be easy, and it will take time. But it's not an impossible task. Eventually, you should be in a position where you can again qualify for a mortgage and purchase a home. As you consider your underwater mortgage options, be sure to think about how each will affect your credit score and what you can do to fix your credit after losing your home. One tool that can help you do that is Homeowner 101's Underwater Homeowners Assessment and Action Plan. This personalized assessment provides homeowners with information and resources they can use to address their underwater mortgage and move forward with their lives.  

Homeowner 101 is an organization designed to give underwater homeowners Answers, Information, and Resources (A.I.R.). We offer the Underwater Homeowners Assessment and Action Plan, a resource for every homeowner who owes more than her house is worth – whether you’re having trouble making your mortgage payment or not.

Tags: underwater mortgage options | underwater credit problems | short sale on credit | | |


About the Author


Molly Castelazo, President
14350 N. 87th St., Ste. 170
Scottsdale AZ, 85260 
480-630-3968

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