Previous Credit Problems

An open and honest approach is best when you meet with a mortgage professional. Experienced mortgage professionals know that there are sometimes legitimate reasons that credit scores take a downturn. They are aware of the impact that illness, unemployment and other financial setbacks can have on an otherwise responsible and creditworthy person.

Once the problem has been corrected and payments have been on time for year or more, the individual’s credit is again considered satisfactory. If you now current on your debts but want to improve past credit problems, the most important action that you can take is to pay your bills on time – no matter how small the payment or account balance is.

Here are actions that you can take if you are currently in debt:

1) If your credit is not in the worst shape, reduce your expenses. Consider making hard choices such as selling a second car or other valuables, taking a home equity loan, applying for signature loan or even selling your house to pay off debt.

2) If your credit is already in trouble, utilize the services of the Consumer Credit Counseling Service (CCC) who can help you pay off debt as if you were in Chapter 13 Bankruptcy – without your actually having to file bankruptcy.

3) If Consumer Credit Counseling Services does not accept you, you may need to consider filing Chapter 13 Bankruptcy. Chapter 13 Bankruptcy takes longer than Chapter 7, but it has less severe implications for rebuilding your credit history than does Chapter 7.

4) If you are so in debt that you cannot pay, your next best option may be to file Chapter 7 Bankruptcy.

These choices have serious implications. You should discuss your unique situation with a professional before undertaking any legal action or filings.