There
is no fast and easy way to repair damaged credit
that took months or years to occur. The law allows
negative information to appear on an individual's
credit record from 7 to 10 years. Now, many states
have specific timeframes if you challenge a credit
blemish.
The
first step is to check your existing credit
record. Anyone can obtain copies of their own
credit report free of charge if they have been
turned down for credit recently. For a fee,
people can request copies of their own credit
report from the three major credit reporting
agencies: Experian at (888) 397-3742, experian.com;
Equifax at (800) 685-1111, equifax.com and Trans
Union at (312) 408-1077, transunion.com. The
Bureau also should provide instructions on how
to read the report and how to dispute any inaccuracies
it contains.
If
the credit report is correct, take care of any
outstanding delinquent obligations first.
A
previous bankruptcy can remain in a credit file
for seven to 10 years.
Depending on when the bankruptcy
was discharged and what kind of credit a borrower
has reestablished since then, it needn't be
an obstacle to obtaining loan approval. The
longer ago the discharge occurred, the better
off a loan applicant will be.
Many lenders also will take
into account the circumstances surrounding a
bankruptcy. For example, they may look more
favorably upon you as a borrower if your bankruptcy
was due to financial reverses you suffered due
to your employer's own financial difficulties.
On the other hand, if you declared bankruptcy
because you overextended your personal credit
lines and lived beyond your means, a lender
probably won't be as forgiving.
If you are in the latter
category, you may want to contact a mortgage
broker who may qualify you for a "b"
or "c ," loan, which usually comes
at a higher interest rate.
Refinancing may be prudent but could be
difficult after a bankruptcy. If you're considering
bankruptcy, you may want to go to your current
lender first and explain the situation. If you
have been current on your payments, the lender
may be accommodating and refinance your loan,
easing your financial situation.
Q:
How
long do bankruptcies and foreclosures stay on
a credit report?
A:
Bankruptcies
and foreclosures can remain on a credit report
for seven to 10 years.
Some
lenders will consider an borrower earlier if
they have reestablished good credit. The circumstances
surrounding the bankruptcy can also influence
a lender's decision. For example, if you went
through a bankruptcy because your employer had
financial difficulties, a lender may be more
sympathetic. If, however, you went through bankruptcy
because you overextended personal credit lines
and lived beyond your means, the lender probably
will be less inclined to be flexible.
Q:
What
can I do if I have bad credit?
A:
While
some people have rebounded from a foreclosure
to buy another home within several years, credit
problems stemming from a foreclosure can continue
much longer for others.
Real
estate experts say you should be candid with
your lender in discussing these issues. If your
bankruptcy resulted from losing your job due
to your employer's financial difficulties, a
lender probably will look upon your situation
more favorably than if your bankruptcy was caused
by overextended credit cards.
A property foreclosure is one of the most
damaging events in a borrower's credit history.
In terms of the effect on credit history, a deed
in lieu of foreclosure or a short sale is not
as adverse an event as is a forced foreclosure.
Copyright
2006 Inman News Features
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