Understand your Credit Score when facing a short sale or foreclosure
Let me present the bad news first. In any short sale or foreclosure your credit score will be hurt, Short sale by about 200 points; in a foreclosure about 400 points.
Hopefully you have realized this website is not about how terrible short sales are, this site is designed to help you through a difficult and emotional time and we want to make sure you come out of this with enough knowledge to correct and repair your credit as soon as possible.
Please read this article to the end as our goal is for you to understand credit scores when facing a short sale and what you can do to increase your credit score as soon as the short sale is complete.
Now for the good news!
There ARE ways for you to improve your credit score after a short sale!
When creditors look at your credit report they are looking to determine if you are a high risk or low risk borrower. They are looking for people that are most likely to repay their debt on time. Your goal is to return your credit score to a higher score as soon as you are able after the short sale.
To improve your credit score after the Short Sale: Understand your credit score and how it is calculated.
There are 3 major credit bureaus – Experian, Equifax and TransUnion. These companies are continually updating your information. They collect data from public records and all the companies that you have and do business with. With this information they compile a report, which is your credit score.
Every year you are entitled to request a credit report from all three of these agencies without having to pay for it. Request these reports annually, review for accuracy, and dispute any discrepancies immediately to all agencies.
There are several criteria that are used to measure your credit score:
Payment history holds a lot of weight. So, please strive to always pay your bills on time, as this criteria is the major criteria and carries the hugest weight in calculating and therefore increasing your credit score after the short sales. Set yourself reminders, open your mail each day, write checks a day earlier so it won’t matter if the post office takes a day longer.
Decrease your amount of debt compared to your available income. Just wait a few more month till you buy the new car or mattress or vacation and use these month and the money you have NOT spent to pay down you r credit cards.
Also, try to keep your credit card balances low and your credit limits high. Call the card company every few month and see if they can increase your limits. a good rule of thumb is to keep your credit card balance less than 20% of your credit limit it.
Length of your credit history is calculated by how many credit cards you have, how long you have used your credit cards taking into account your management of paying. Beware of opening too many cards because each time you do your creditors inquire and can affect your score negatively. Conversely closing credit cards can also affect your credit score as that decreases your available credit
After the short sale pay all your bills on time, have a written budget and try to stick to it as much as you can. Yes, again a Short Sale will hurt your credit score BUT it isn’t as bad as a foreclosure and it absolutely isn’t the end of the world ! Trust me, I have worked with a lot of people that went through a Short Sale situation and they were surprised how fast they got their credit score back up.
For more detailed information check out this website. (be aware it has advertisements) BUT they are clearly marked as such. http://www.wikihow.com/Repair-Your-Credit
Please give a quick call 727 410 7777 or send the form below with any questions you might have. When you list your property as a Short Sale with us, you are not alone. We will walk you through the short sale process step by step and we are always here for you to listen, give you feed back, bounce ideas around and give you helpful tips.