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Foreclosures Plaguing Reports, More Homeowners in Need of Cleaner Credit Sheets

By Faye Mergel
Published: Sunday, October 18th, 2009

Many American consumers found it impossible to keep their homes as recession went on longer than foreseen. Some experts say many people did not even see the economic crunch coming, that is why they were caught treading thin credit lines as US market dipped and fluctuated.

Foreclosures Plaguing Reports, More Homeowners in Need of Cleaner Credit Sheets As of August this year, foreclosure rates in America remained at near record-high with 358,471 homeowners defaulting on their loans. Although that is a decrease of one percent from its preceding month, it is still 18 percent higher than the rates back in August 2008. Statistics prepared by Mortgage Bankers Association reveal that 250,000 families enter foreclosure every month which translates to one child in every classroom in danger of losing his/her home.  This makes the future murkier for many consumers since a foreclosure could tarnish a credit report for seven years, while bankruptcy files could remain there up to ten years. The further implication: a lot of Americans will not be able to purchase their own homes in the near future.

The main challenge of homeowners now is to rebuild their credit score after defaulting their mortgage loans. Experts say having solid debt standing is very critical in a credit-dominated society so they encourage consumers to begin the rebuilding process immediately. The first thing specialists advise consumers to do is pull out their credit reports and start reviewing the items it contains. Foreclosures will certain be recorded but experts say there could be other negative items there that a person does not really own.  They warn consumers that identity is especially rampant during tough economic times so they must be wary about their records. They likewise tell consumers to be mindful of credit-repair scams, adding that it makes people pay for something they can and should do on their own.

However, experts encourage potential homebuyers to be more optimistic despite current mortgage crisis. They note gradual recovering in the housing sector with the market being stimulated by federal tax credits and lower home prices. Fitch Ratings predict that prices will be 17 percent lower this month than it was two years ago. Competition among real estate developers is also stirred by increased buying trends so many companies are expect to ease standards and prices, even just at the slightest degree.

Meanwhile, consumers who had undergone foreclosure are advised to check their credit report and make sure if it is updated. Foreclosures and short sale should not tarnish a person’s record for too long, experts add.

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