Question: How does foreclosure work with respect to my credit score? My home was foreclosed, and I want to make sure I’m rebuilding my credit quickly.

Philip Tirone: First off, know that you are not alone. I suspect that you, like millions of other people, got swept up into the real-estate hype, purchasing a home that you thought would grow in value. Now your payments seem goliath. Your question — ”how does foreclosure work? — is one you probably never thought you would have to ask.

Fortunately, you are on a quest to understand how foreclosure works and how it affects your credit score. Though your foreclosure might have been bad for your credit score, you should feel proud that you are taking steps to minimize the damage and create a plan to rebuild your credit.

First, read our article: Credit Repair After Bankruptcy. Much of the information in the bankruptcy article also addresses your question – how does foreclosure work with respect to my credit score? Namely, the article advises you to obtain new lines of credit and pay your bills on time and in full.

If you want to know how to improve your credit score quickly, you should also follow the 7 Steps to a 720 Credit Score:

1. First, keep your utilization rates below 30 percent of your credit limit.
2. Second, keep three to five active credit cards (but never cancel credit cards).
3. Third, be sure that your creditors are accurately reporting your credit limits.
4. Next, add a healthy installment loan to your credit report.
5. Fifth, comb through your credit report and search for all high-priority errors.
6. Then, learn how to negotiation before paying a bill that has been turned over to a collection agency.
7. Finally, make a plan to maintain a 720 credit score once it has been obtained.

Knowing how to build credit can help you make strategic decisions after suffering a foreclosure. Indeed, when you read Credit Repair After Bankruptcy, you might be shocked to learn that abstaining from using credit and becoming a cash-only citizen is not the answer to your question: How does foreclosure work with respect to my credit score?