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It is all those things that appear on your credit report that are unflattering. They include: missing a credit card payment, defaulting on a previous loan, filing for bankruptcy in the past seven years, or not paying your taxes.
Other black marks include a judgment filed against you - perhaps for non-payment of spousal or child support-or any collection activity.
It is not easy but certainly doable with both commitment and time.
By law, any unfavorable information in your credit file can stay there from 7 to 10 years. Today, however, a creditor must remove credit blemishes in a timely fashion if you challenge them and they turn out to be false.
The first step in any recovery plan is to get copies of your credit records. You are entitled to free copies if you have recently been turned down for credit. Otherwise, request copies for a fee from the three major credit-reporting agencies: Experian, (800) 311-4769; Equifax, (800) 685-1111; and Trans Union, (800) 916-8800.
If you see any incorrect information, let the credit reporting agencies know. Also contact the companies that reported the negative claims against you.
If the credit report is correct, move immediately to take care of any outstanding delinquencies, tackling a little at a time until you get back on the right track. In fact, make an effort, if at all possible, to repay your debt in full and on time for six months to a year to prove you are working hard to repair any damage.
Unfortunately, it is a pretty bad blemish. A property foreclosure is one of the most damaging events in a borrower's credit record. In terms of the effect on your credit history, a deed in lieu of foreclosure-where you voluntarily 'give back' your property to the lender-or a short sale-when the lender agrees to write off a portion of the loan that is higher than the value of the home-is not as adverse as a forced foreclosure.
Check with your state. It may provide special protection through the filing of a homestead exemption, which exempts some or all of the value of your equity in the homestead-the home that you live in and the land on which it sits-from claims of unsecured creditors. Whether to file a homestead exemption will depend on your situation. Contact your county recorder's office for details.
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