Effect on one’s credit and prospects of purchasing a new home are usually among top concerns for most homeowners considering short sale. While there are no guarantees in today’s market, federal entities like Freddie Mac, Fannie Mae and FHA are generally Rebuilding credit after short salemore forgiving than most borrowers would think, especially when there are extenuating circumstances.

Although every situation is different, generally we see most homeowners who work with us eligible to purchase a new home within 2 to 3 years after a short sale, as long as certain conditions are met. Among the most important conditions is their success in rebuilding their credit.

Banks are also willing to give a break to those who are able to show solid income and able to put up to 20% down.

We strongly suggest working with a reputable credit repair counselor in order to re-establish your credit. Please consider the tips below as a general guidelines, and by no means a legal advice.

  • Pay attention to your credit score.
  • Make sure you are only requesting your credit score from credible entities such as TransUnion, Equifax, and Experian. Certain agencies that routinely pull credit may give you a false credit standing. Pulling your credit score from the wrong source, may affect your credit. Monitoring your credit is important to catch early errors that could affect your buying power in the future.
  • Pay Bills that are in Collections.  Make sure that you are negotiating not only the payment plan to repay the debt, but to start reporting it as a positive mark as well as getting it deleted from your credit once it has been paid in full. This can also apply to promissory notes.
  • To limit risk exposure and risk-protection, apply for credit individually. (Including friends, family, spouse, etc.)  You always risk the unforeseen credit activities of the other person.
  • Maintain at least 3 revolving credit lines open and in good standing at all times.  
  • If you have credit cards that are paid off, it’s a good idea to use them to make some payments to other cards to show that you know how to budget and handle credit responsibly
  • Keep your credit card balances under 30% of your credit limit. This is a huge tip in the credit reporting world.  
  • Always verify the accuracy of your reported credit lines and remove high-priority errors from your credit report.
  • Have at least one active or paid installment loan on your credit.