After Bankruptcy, Rebuild Your Credit Before Buying Real Estate

You have gone through bankruptcy and you do not owe anyone. Now
is the perfect time to purchase that home you have always wanted
— right? Wrong! Yes, you can probably locate a real estate
mortgage lender, since you cannot declare chapter 7 bankruptcy
again for at least 6 years. The problem is that you will pay
the highest finance charges for the privilege of obtaining that
real estate mortgage, charges that will extend over the life of
the real estate loan.

Before even looking at real estate, get your credit
straightened up first. The bankruptcy will appear on all three
of your credit reports from seven-to-ten years, which will make
you a higher risk to real estate lenders. You cannot do anything
about this; however, you can show real estate lenders that you
are handling credit much better now by rebuilding it. This can
lower your risk factor, when obtaining a real estate mortgage.
Using the following improvement steps, you actually can rebuild
your credit in a relatively short time.

First, get copies of your credit report from the credit
agencies, and clean them up. You have the right to one free
report from all three agencies annually, which can be obtained
through http://www.annualcreditreport.com.

Ensure that creditors, who were listed in your bankruptcy, have
cleared their information from your credit reports. Otherwise,
it will appear as if you still owe them money and are not
paying.

Ensure any creditors not listed in your bankruptcy and you are
paying regularly have been reporting your good credit record to
all three agencies. Contact any not reporting this and ask them
to do so. This will increase your chances of getting a loan for
your real estate.

If there was a specific event or cause for your bankruptcy, you
can add up to a 100-word explanation to your credit report at
each agency. The real estate lender will get this explanation
as part of your credit report.

It will look especially good to real estate lenders if you have
received credit counseling, and the counseling will help you in
several ways. A good credit counseling agency will help you
create a budget and counsel you in how to use and stick to it.
They offer counseling on using credit in your future, as well
as how to re-establish your credit. They can help you move
toward your goal of buying real estate. Once you have
successfully completed credit counseling, ask them for
something in writing to that effect. It can help when applying
for your real estate loan

The problem is finding a reputable agency. Some are downright
questionable. Here are a few ideas to assist you in locating a
reputable agency:

•They should be a member of either the National Foundation for
Credit Counseling or the Association of Independent Consumer
Credit Counseling Agencies. Both are national trade
associations.
•Agencies approved by the U.S. Trustee’s office (part of the
Department of Justice) are good agencies. You can see those for
your area at:
http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm.
•Interview the agencies, asking what they offer and the cost
for each service. Good agencies should meet with you for
60-to-90 minutes, reviewing your financial situation and
offering budgeting advice — before doing any credit repair.
•Ask for costs in writing from the agency you choose. They
should charge around $50 or less, with budget counseling
sessions for less than $20 each.
•Steer clear of those who push their debt management program,
where they want you to pay all your remaining creditors through
them.
•Check http://www.ftc.gov/bcp/conline/pubs/credit/fiscal.htm
for more ideas from the Federal Trade Commission.

Use the credit counseling agencies to help you rebuild your
credit the right way. It can take less than a year to achieve;
yet, it will make a big difference when you obtain that real
estate mortgage.

Article Source: http://www.article-heaven.com

John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more on San Diego Homes for Sale visit www.twtrealestate.com

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