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How Short Sales Impact Your Credit Rating
If you find yourself in dire straits and can no longer afford your house payments, foreclosure may seem to be your only option. However, a short sale can stave off foreclosure and have a lesser effect on your credit rating. With a short sale, you allow your lender to sell your home for less than its value, or less than what you owe on it. In return, the rest of your debt on the home is written off, and you no longer owe the bank or finance company anything on the loan. It is basically washed away.
The impact of a short sale on your credit report and credit score depends mostly on how the lender reports the short sale to the credit bureaus. There usually isn't an entry described as a "short sale" on your credit report. Your lender can report your account as a redeemed foreclosure, as a charged off account, or they can report the account as settled for less than the original balance after the account became 180 days late. Each of these scenarios can negatively impact your credit and cause your credit score to plummet. However, you will no longer be under the burden of a home you can't afford to pay for, and you can bounce back with proper planning and diligent effort.
If you have recently dealt with a foreclosure or short sale, it is important to take the proper steps to repair your credit. It is wise to enlist the services of a professional. That's why we have proved a list of top ranked credit repair companies working in the United States for you to browse and find the best one to help you achieve your financial goals.