If you’ve just gotten out of bankruptcy and are thinking of buying some real estate, think again. Buying real estate a short while after paying off all your debts is never a good idea for several reasons. The most costly reason though is because for obtaining a mortgage, you’d be paying extremely high finance charges.
The first thing you should aim at doing is getting your credit to show some stability over an extended period of time. Lenders will no doubt consider you a high risk since all your three credit reports; from seven to ten years, will show your bankruptcy. The part that you have control over and which you can turn to your advantage is rebuilding your credit.
Rebuilding you credit
· You must first clean up your credit reports. You can do this by obtaining one annual credit report from all three agencies free of cost from www.annualcreditreport.com
· Make sure that the creditors to whom you owed money have been taken off your credit reports. Failure to do this could result in giving the impression that you still owe them money.
· Strive to get your current creditors to report your good credit record to all three agencies. This will give lenders a sense of security while dealing with you.
· In the case that your bankruptcy was caused by a particular event or state of affairs, be sure to mention it in the credit reports with all three agencies. You are permitted to write a 100-word explanation of the same.
· What would help immensely would be to show that you have attended credit counseling. In any case, credit counseling is a good idea since it will help you to get your credit back on track through intelligent budgeting and sticking to your budget. On completion of credit counseling, make sure to get something in writing to that effect. This will certainly improve your standing with lenders.
Getting the right agent
Finding reliable, efficient agents in where the challenge lies. There are a lot of below par agencies out there, which should be avoided.
· Your agent should be a member of the National Foundation for Credit Counseling or of the Association of Independent Consumer Credit Counseling Agencies. Both of which are national trade associations.
· Those approved of by the US trustees office are reliable. The US trustees office is part of the department of justice. You can get area specific information at http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm
· Good agencies will offer you a lot of time to ask question and clarifying your doubts before finalizing on anything. 60 – 90 minutes is how much time they should be ready to give you.
· These agents should charge around $50 or less. Budget counseling sessions should also be provided for $20 a session.
· Any agency tying to convince you to take up their debt management program should be avoided. They want you to pay off all your remaining creditors through them.
· For additional information along the same lines, given by the federal trade commission, check out http://www.ftc.gov/bcp/conline/pubs/credit/fiscal.htm
Remember to use that credit counseling option. You may have to wait a while longer to get that mortgage, but it’ll definitely be worth it.
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