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Foreclosures
What to Do If It Happens to You
By Shel Franco
. All a refinance is really doing is transferring debt from one place to another. Once you refinance your home to pay down unsecured (credit card) debt, you have just moved an unsecured debt to a secured debt and have put your home at risk of foreclosure if you are unable to pay. If you are considering using home equity to pay off unsecured debts, be confident that you will be able to keep up with the higher payments on your home loan going forward. 
Improving Your Credit Score
After foreclosure it is important to look at your credit report and credit score, Smith says. While a foreclosure will certainly hurt your credit, there are ways to improve it over time. Here are some ways Smith says you can rebuild your credit:
- Manage your current credit accounts and keep your balances at comfortable limits. If you are "maxed" out on every credit card this reflects poorly on your credit management skills. You are more than likely over extended and at a higher risk to miss a payment.
- Be aware of your credit history and notify the credit agency if something is incorrect.
- Consider opening new accounts and paying them off on time to show creditors your ability to manage your credit. Only positive credit management and time can improve your score after a foreclosure, but it can be done.
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