How to Repair Your Credit after Walking Away from Your Mortgage

If you have walked away from your mortgage, it will become necessary to repair your credit at some point. While you might think that you can get by without credit, once you try to put it into practice, it becomes more difficult than you might think. You will use credit in a number of different circumstances. Every time you purchase something big, your credit will be checked. Even when you apply for a property lease, the landlord will usually check your credit and charge you a deposit according to how good your score is. Even something as simple as getting a cell phone contract will be negatively affected by your credit score. Therefore, you will need to rebuild your credit as best as you can. Here are a few tips to rebuilding your credit after walking away from your mortgage.

Your Finances

When you are forced into walking away from your mortgage, you are usually in a very bad situation financially. When you are in this kind of situation, it requires that you make some major changes in your life. If you do not change anything, you may someday find yourself in the same problem again. Decide your priorities and get rid of payments that you cannot afford. This will help you to avoid future problems.

Focus on Debt

When you are trying to rebuild your credit, you will want to put an emphasis on paying off debt. The debt that you have on credit cards, store accounts, and other accounts could really be hurting your credit score. Make an effort to try and eliminate as much debt as possible from these accounts. While it may seem very difficult at the time, it can really make a difference in your credit score. One of the criteria that the credit bureaus use in determining your score is the amount of money that you have on your credit cards and accounts. If the balances are above 30% of the maximum limit, your score will not improve.

Commit to Making Payments

Another problem that tends to happen when money is scarce is that you start to miss payments. When you do not manage your finances properly, missed payments can happen frequently and cause a big problem. One of the biggest factors in determining your credit score is the steadiness of your monthly payments. All of your creditors will report to the credit bureaus whether or not you make your payments on time.

As much as 35% of your credit score is made up of this one factor. Therefore, you need to make it a habit of paying all of your bills on time. If you continually miss payments on your various accounts, it will hurt your credit score greatly. Once your finances are in line, you need to make it your primary focus to pay everything on time. 

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