Credit Repair After Foreclosure in New Jersey
Emerging from the foreclosure process can give you time to finally focus on moving forward with your future. Unfortunately, after you have been foreclosed upon in New Jersey, your credit will have taken a substantial hit—making it more difficult for you to find a new place to live, an affordable car loan or even a credit card. To move toward a more financially healthy future, it is important to focus on credit repair after foreclosure in New Jersey.
A qualified foreclosure attorney can provide advice that is specifically tailored to your situation, but some general principles will apply in all cases.
Examining Major Credit Reports
The first step to credit repair after foreclosure in New Jersey is for an individual to be aware of what their credit report actually contains. Experian, Trans Union and Equifax are the three major credit reporting companies that can provide the borrower with a detailed report of their borrowing and payment history.
If the borrower disputes any item on their credit report, the reporting agency is legally required to investigate the item and either confirm the status of the debt or delete it within 30 days of the dispute. Assuming the information contained in the borrower’s credit report is correct, he or she should then begin the process of repairing the credit score.
Credit Repair Steps
Negative marks on a borrower’s credit report typically stay on the report for between seven and ten years. As a result, credit repair after foreclosure in New Jersey can be a lengthy process that requires both patience and diligence on the part of the borrower. Steps that can positively impact a borrower’s credit include:
- Paying down loans: The borrower should focus on paying down any existing credit card debt as a first priority, and focus reducing the principal balance on student loans, car loans and mortgages second. A substantial part of a borrower’s credit score is based on the level of their debt compared to available credit
- Make on-time payments: While it may seem like a no-brainer, it is critical that a borrower meet all payment obligations in a timely manner in order to rebuild credit
- Secured credit cards: If the borrower is unable to qualify for a traditional credit card to increase their available credit limit, a secured card can provide an option to help reestablish credit. A secured card requires the borrower to make a deposit as collateral
- Explain the situation: The credit reporting agencies will allow a borrower to leave a statement explaining the situation on their credit report. If the individual’s financial difficulties were caused by a one-time issue, such as job loss or illness, this could help in situations where a potential employer is checking the individual’s credit but will not impact the credit score itself
Actions to Avoid in New Jersey
After a foreclosure or bankruptcy, an individual may become a target for multiple credit card companies offering credit. While this may seem like a good idea, some of these cards can carry extremely high-interest rates and may actually lead to the borrower taking on more debt—thus continuing the cycle of missed payments and mounting debt.
Borrowers should also be wary of so-called credit repair agencies that offer to remove negative marks from the individual’s credit report to help with credit repair after foreclosure in New Jersey. These agencies likely charge a fee to challenge the negative items and have them removed from the report. However, the lender will almost certainly report the item during the next credit reporting cycle and have it included in the borrower’s credit report again.
How a New Jersey Foreclosure Attorney Can Help with Credit Repair After Foreclosure
An experienced foreclosure attorney can help with credit repair after foreclosure in New Jersey and can help you evaluate offers of credit and manage your finances going forward. It will take time to repair your credit, but an attorney can help you develop a healthier financial picture for the future.