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How Does A Short Sale Effect Your Personal Credit?

When you’re in the process of going through a short sale there are many things to factor in when considering the impact of your personal credit.  For instance, the short sale itself will only effect your credit by 50 points at the maximum in most cases.  The harsh reality that most individuals going through a short sale fail to realize is that the most damage to your personal credit will mainly come from the number of payments you will miss.  Mainly what will happen when you miss a payment it’ll report on your credit as a 30 day late payment which will reflect in a 30-60 point credit score reduction, and this will continue to happen until either the short sale is complete or you make a payment.

On a positive note, once the short sale is complete and finalized, it’ll take roughly 2-3 years to get your personal credit back on track.  This may be accomplished sooner, but I’d rather be safe than sorry with the information I give out.  In addition, after the short sale is complete, the mortgage or tradeline for your credit will appear as “account settled, paid in full.”  This is an ideal situation for the rebuilding process as it’ll no longer report negatively against you.

In conclusion, a tip I’d like to give in closing is the following, once the short sale is complete make sure you keep your HUD-1 statement from the closing (make sure you actually keep all of closing documents), and request from the lender/bank who approved your short sale, a statement showing a zero balance for your account.  With your new document in hand from the lender/bank showing you have a 100% zero balance you can now submit this to all of the major credit bureaus (experian, transunion & equifax) so that they can update your personal credit immediately rather than waiting up six months for the bureaus to take care of this on their own.  You can do this with any other documents on your credit as well as most credit reports report 77% of the time in error.

I hope this has been helpful information, and can now shed some light on the rebuilding process for life after the short sale.

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