October 3rd, 2014 8:02 AM by Jackie A. Graves, President
Short selling allows you to avoid
foreclosure on a home.
Unfortunately, there is no way to avoid
the damage a short sale does
to your credit score. A short sale can knock as much as 160 points off
your credit score.
A loan that is paid by a short sale
could be reported as a charge-off, a settlement, a deed-in-lieu of foreclosure,
or “settled for less than the full amount due” on your credit report.
It takes time for your credit to
recover after a short sale. Credit scores place the most emphasis on the most
recent 24 months. So you can expect your credit score to slowly begin to
recover in a couple of years or so.
To rebuild credit after a short sale,
do everything you can to stick to credit-positive behavior.
Pay bills on time, keep credit card
balances low and only take on new credit as needed.
If you have credit card debt, getting a
plan to pay down those balances will help your credit score as well. Your amount of debt accounts
for 30% of credit scoring and lowering your credit card balances will help to
improve your credit
utilization and boost your credit score.
Getting your credit card balances down
to less than 10% of credit limits is optimal for your credit score. And paying
off credit card debt entirely is good for your wallet.
Monitor your credit and chart your
credit recovery post-short sale with Credit.com’s free credit tools. You
will receive two free credit scores, with monthly updates, plus customized credit
tips for improving your scores.
Keep close tabs on your credit by
reviewing your credit reports from each of the three major credit reporting
agencies — Equifax,
Experian and TransUnion. You can request a free annual report from
each by visiting AnnualCreditReport.com.
By Lucy Lazarony | To view the
original article click here