Loss of income and credit card debt are two common reasons homeowners can't make mortgage payments. If you can't pay back this loan, the lender could take possession of your house to recover the amount owed. A foreclosure will remain on your credit report for seven years, making it difficult to regain financial stability. However, there are steps you can take to start rebuilding your credit now and improve your score. 

3 Steps to Repair Credit Following a Foreclosure

1. Evaluate & Modify Your Spending Habits

To avoid financial hardship in the future, you first need to understand how you're spending money each month and where it's feasible to cut back. This starts by keeping track of your monthly spending, which you can do with a spreadsheet or a financial app. The easiest expenses to cut include unused gym memberships, dining out, and TV and magazine subscriptions. From there, you can set a budget and allot funds to necessary expenses, such as living costs. The money saved can go toward paying down credit cards and other debts. 

2. Pay Off Debt

Your credit score can start to improve within a few months of paying off debts. Pay off the most expensive loans first, as they have the highest interest rates. Paying more than the minimum each month will also reduce the interest. This will allow you to pay off the loan faster and positively impact your credit after a foreclosure. 

A bankruptcy attorney familiar can also evaluate different debt consolidation programs. This repayment method involves merging credit card balances or high-interest loans into one new loan with a low-interest rate, making it easier to keep track of what is owed and pay it back faster.

3. Apply for a Secured Credit Card

Being responsible with credit can reflect well on your credit score. Since foreclosure can make you a high-risk applicant for a traditional card, apply for a secured one instead. You'll have to put down a deposit as collateral and have a spending limit that matches it. This means the lender takes on less risk if you default on payments. Once you get the card, pay it in full each month.

For legal guidance following foreclosure in Tennessee, contact the Law Offices of Harry G. Lasser. With offices in Crossville, Cookeville, and Smithville, the bankruptcy lawyer uses his 20-plus years of experience to help clients put an end to harassing phone calls from creditors and improve their financial situation. Learn more about the counselor online and call (931) 372-9988 for a free consultation.