A recent Fox 35 Orlando news story shows how Experian’s new credit reporting policy can actually help improve one’s credit score after losing a home to foreclosure.
News that the Experian Credit Agency is the first to count rental histories when calculating one’s credit score, is the first solid bit of hope she’s had in awhile.
The woman featured in the news piece lost her home to foreclosure, rented a similar house literally around the corner, and is saving $600/month compared to her old mortgage that she was not able to pay.
A realtor quoted in the news story claims:
“You’re looking at 18 to 24 months for a homeowner to rebuild his or her credit. So the fact that Experian is opening up this opportunity…is great!”
In her case, she can save about $15,000 after 24 months. That is not too shabby an amount of savings to put as a down payment on a new home in the future.
While not all landlords are reporting (and not all credit bureaus are accepting) rental payment history, the fact that Experian is doing it looks like a positive step to help foreclosed homeowners get back on the right track.
But I want to be clear, moving out of a home that is still in the foreclosure process, and renting another place might not be the best answer for everyone.
You may have options like:
- Chapter 13 to save your existing home.
- Chapter 13 Mediation Program to attempt to modify your home loan.
- Live in the home for free right up until the foreclosure sale date (since it is your home until sold at auction – see Foreclosure Process in Florida.)
- Foreclosure defense.
As well as other options, depending on your circumstances.
Too often, my clients focus on their credit rating only, instead of their full financial health. Sometimes it is not worth the financial sacrifice to make payments only to attempt to keep your credit score high.
It may be a better option for you to shed high debt and high payments (on homes and cars for example) through a chapter 7 or chapter 13 bankruptcy, and then work towards re-establishing your credit score going forward.
Please call 407-749-0080 for a free consultation to see how I may be able to help you with your financial health.