I was a Loan Officer in Reno, NV for several years becoming a Realtor. I’ve seen the devastating effects of a foreclosure on a credit report and the look of disgust in a loan underwriter’s eyes when they viewed such a report. However, even though a Short Sale is not as bad on your credit, it will hurt it. I often ponder what the majority of American’s credit will look like in the years ahead. There will be so much derogatory credit out there, with all the foreclosures, Short Sales and Loan Modifications happening, I believe that moderately bad credit will be the “new normal” credit.
Consider this: according to most experts, 78% of Americans have ERRORS on their credit score. If you have negative errors on your report that get fixed, that will be a benefit to your score. Average people can, on their own, take steps to repair and restore their credit report/ credit score after a short sale.
I often recommend the following proceedures to avoid or minimize credit hits after your short sale.
Follow these simple steps.
1. Review your credit report. I recommend the site: https://www.annualcreditreport.com/cra/index.jsp.
Do not go to any of those “free credit report” sites. After you get the report, review everything on it.
If you see anything that is negative, inaccurate, or questionable make a note of it. On your list, write down why you disagree with that item on your report.
2. Write letters to the different credit bureaus about what you are disputing on your report. There are several sample letters available online: http://www.creditinfocenter.com/forms.
Here is a simple tip: DO NOT use the online dispute forms that are on the websites of the 3 credit reporting agencies. Write your own letter and make it short, firm, and demanding of action.
3. Mail your letters to the credit bureaus through either registered or certified mail. This is what sets the clock for them to correct issues.
The law lays out a timeline that they have to follow (45 days.) And, this gives you a record of the mailing, too.
4. Keep a file of all you have done, including dates. Then, track your results.
5. When you’ve gotten back responses (or if 45 days pass and you haven’t gotten responses), then it’s time to repeat some of the process again for other items on your credit.