Let’s start with the bad news. You are bound to face a drop in your credit score if you are found in a deed of lieu in foreclosure and how far that your credit score would drop is dependent on your credit score before the event and the type of mortgage settlement in question. How to recover from a deed in lieu of foreclosure is still very possible. Any person doing a foreclosure should expect a drop in their credit score from eighty-five to one hundred and sixty points, but this also depends on the beginning of their credit score.
How To Recover From A Deed In Lieu Of Foreclosure
Someone who is doing a deed of lieu in foreclosure should also expect credit scores to drop from fifty points to one hundred and twenty-five points, but again, this is still dependent on the starting of your credit score.
The unfortunate thing about all this is that the higher your credit score before this unlucky event, the more your credit score will drop. However, this might actually be the one time a person would be thankful that he has a lower credit score. Even though this might hurt now, it is encouraging to know that it is just temporary.
This bad report would stay on your credit score for about seven years, but it is still possible for your score to start climbing immediately after this sad event. Seven years is actually a very long time, but you can still use this time to your own advantage.
First, you need to have a basic strategy to help you recover from a deed of lieu in foreclosure. There are some step-by-step approaches that any individual can take on recovering from a deed in lieu of foreclosure.
Ask For Copies Of Your Official Credit Report
Once there has been a report on the deed of lieu in foreclosure, you should collect copies of your credit report from each bureau. While doing this and going through the copies, ensure that all of its dates are accurate and that there were no records of late payments. Also, ensure that you accurately recorded the type of settlement, and if there’s a mistake, you can dispute such information with the credit bureau.
Go Through Credit Sesame Account To See If You Can improve credit Score.
After logging into your credit sesame account, there is a section referred to as the My Credit Analysis section, which is found next to your score, and there is actually a grade for every factor. So if there is an area where your grade is less than an A, you can boost that particular area.
Some ways to improve credit score in the sesame account is by not missing out on payments, creating more charges on your credit, not opening new accounts but maintaining the older one, and not applying for credit unless necessary.
Save Up For Purchase Of Your Next Home
Taking time to build up a good amount of cash would enable you to make a twenty percent down payment when purchasing your next home. This helps create significant equity in your home and get the best lowest rates possible. This also means you would pay only lower monthly payments and avoid paying heavily every month.
Create A Plan When Buying A Home Next Time
Most people have made mistakes when buying a house, and that mistake came back to haunt them, resulting in a deed of lieu in foreclosure. Identifying your mistakes and drafting out a plan would help you avoid the mistakes you made before. It can also help you save up the twenty percent down payment when you want to buy a house and have your home inspected by a licensed inspector.
Check Your Credit Report After Seven Years
In seven years, your deed of lieu in foreclosure should have dropped off from your credit report, but you should make it a point of duty to check if it indeed dropped off from your credit report. There should also be an increase in your credit score, and then you can start afresh like nothing ever happened.