How Does A Short Sale Affect Credit?

So how does a short sale really affect your credit rating? Well in my years of experience in helping people avoid foreclosure by using short sales (As well as performing one for myself), I can tell you that it doesn’t affect your credit as bad as one would think.

How Is A Short Sale Reported On Credit

First we must understand how it is actually reported on our credit. In my experience it isn’t reported as a “short sale” on your credit. Rather the short sale is usually reported as “Sold For Less Than Amount Owed.”

Now this reporting is not nearly as bad as “Foreclosure” on your credit report when you are applying for future loans.

Short Sale Delinquent Payments Are The Problem On Credit

The biggest issue in my experience dealing with short sales on your credit report is the non payment or monthly deliquency each month.

This contributes to a monthly negative reporting which in turn lowers your score every month.

So… If you can expedite the short sale using a short sale expert and get the short sale done quickly, your credit will rebound quicker due to the limited delinquency of the short sale.

How Long Does A Short Sale Stay On Your Credit

It is said the reporting “sold for less than owed” stays on for seven years. However, I have been personally able to get loans at competitive rates in less than 24 months.

Again, future lenders see that reporting and know at least it isn’t a foreclosure.

One caveat. Be sure during and after a short sale, you are working diligently to keep all other debt obligations current. This will in turn help to build your credit faster.

How Quickly Can I Buy A House After A Short Sale?

I have persoanlly assisted people in selling them a home with financing 18 months after we successfully completed a short sale for them.

It isn’t the end all. Short sales are common for many reasons. Market conditions, death, divorce, job loss and relocation to name a few that contribute to short sales and foreclosures.

Don’t allow a short sale to ruin your financial future. You can rebound and rebound quickly.

How Low Will My Credit Go With A Short Sale

As mentioned the worst position is monthly delinquencies. It is said, the final short sale on the credit is 75-125 point drop.

However, in my personal experience on my own credit, I saw the biggest drop when I wasn’t paying on the mortgage. Once the short sale was completed, I actually saw my credit build. And in about 2.5 years, my credit went from low 600’s to low 800’s.

But, I did everything needed to continue to build credit, make payments on time and not over leverage.

How Does A Foreclosure Compare To A Short Sale On Credit

It is said, a Foreclosure can drop your score by as much as 160 points. And again, monthly delinquncies do not help.

Furthermore, future lenders will see “foreclosure” on your credit reporting as opposed to “sold for less than owed” in a short sale scenario.

Considering On Doing A Short Sale?

If you are in trouble and upside down with your mortgage, fill out the information below explaining your scenario along with your address. We have short sale experts throughout the country who we can refer to you.

If you are a real estate professional looking to help people avoid foreclosure with short sales, click the link above.

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