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©
2002 Ruth E. Campbell. |
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Frequently Asked Questions Mortgages
- Q & A Q: How do you clear up bad credit?
A: 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. 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 (800) 392-1122,
Equifax at (800) 685-1111 and Trans Union at (312) 408-1050.
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. Resources: * "Rebuild Your Credit: Law Form Kit,"
Nolo Press, Berkeley, Calif.; 1993. Q: What options are there after Chapter 11?
A: 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 them for a "b" or
"c ," loan, which usually comes at a higher interest
rate. Resources: * "Rebuild Your Credit: Law Form Kit,"
Nolo Press, Berkeley, Calif.; 1993. Q: Can I refinance after bankruptcy?
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. Resources: *"Rebuild Your Credit: Law Form Kit,"
Nolo Press, Berkeley, Calif.; 1993. Q: How bad is a previous foreclosure on credit?
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