Tight credit markets and falling home values have left millions of consumers with major mortgage problems. If this has happened to you it is urgent that you become proactive about your credit. Credit repair can help you limit the damage and recover more quickly than you might imagine.
The Mortgage Market Tsunami
The mortgage industry is half the size it was just two years ago. And while the breadth of the industry has diminished, credit guidelines have tightened dramatically. The real turning point for the mortgage market occurred in June of 2007 with the collapse of two massive Bear Sterns hedge funds which were heavily invested in mortgage based securities. The technical details are beyond the scope of this credit repair article, but suffice to say that the shockwaves of this event spread through the entire financial world, affecting not only the credit markets but real estate values as well. The impact on consumers has been dramatic as the combination of tight credit and falling home values has pushed many consumers to default, short sell, or attempt to renegotiate their mortgages. These events can weigh heavily on credit scores. There are a few defensive credit repair strategies that help you minimize the damage.
Isolate the Issue with Credit Repair
It is important to isolate the derogatory mortgage event as much as possible. This means that it will pay to focus your credit repair efforts on the balance of your credit report. An isolated derogatory issue has less of an impact on your score than an issue surrounded by other derogatory items. Make sure that your credit report is as clean as it can possibly be. The FICO scoring model will reward you by weighing the mortgage issue less heavily and allowing its influence to fade more quickly than you might guess. In fact, if you manage this event properly your credit score can almost fully recover within single year.
Correct the Reporting
Examine the mortgage reporting carefully. All erroneous information should be removed so that the event reports as simply and cleanly as possible. It is worth noting that the mortgage servicing industry is in shambles. Reporting errors are common, the clear result of disorganization and systems failure. This is frustrating, but it is understandable, and should be dealt with via a systematic credit repair effort. As difficult as these issues may seem, you will be surprised at how quickly your credit can recover when you make a proactive credit repair effort.