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How Will a Short Sale Effect My Credit?

Sep 11, 2012
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The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy. In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit. Also, many lenders are beginning to look at Notice of Default filings and disallowing future borrowing for mortgages for 2 to 3 years.

Short Sales are still a relatively new concept. Banks have the option of submitting the short sale to the credit bureau as "Paid in Full" or "Settled for less than full balance". Many agents do not know this, and do not have a solid strategy for requesting a "Paid in Full" report. You need to work with an agent who knows the in's and out's of Short Sales!

As far as your credit score is concerned, there is no evidence whatsoever to support that a short sale will lower your credit score. Some have the idea that this is like a bankruptcy or a foreclosure. That's far from the truth! In a short sale, the lender is simply allowing you to pay less than you owe!

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly. AND work with a company we will refer you to to help clean up your credit.

Read 1263 times Last modified on Thursday, 07 March 2013 17:31

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