A short sale can damage your credit score, which may take a beating of more than 80 – 150 points. While a short sale may be a viable alternative to foreclosure, your equity gets reduced because the value of your home is less than what you owed. So, a low credit score increases your likelihood of having to pay a higher rate of interest for credit cards and mortgages in the future.
Normally, after a short sale, it will take 18-24 months before you become eligible for refinancing. This is because short sale proceedings follow payment defaults, which harms your credit score. Ideally, to reach a score of at least 650, consider the following tips:
- Get a copy of your credit report and carefully scrutinize for discrepancies or irregularities.
- Make all payments on time. Pay your major credit instruments, like car loans and credit cards, on time. This is vital when you are rebuilding your credit.
- Pay off any collection accounts by negotiating with your creditors for a lower amount as total payment on the account.
- Use your credit cards with caution and keep the balance on each card to ideally 25% to 30% of the approved credit line.
Remember to contact your local consumer credit counselor or credit bureau to understand your credit report better. Also, setting up an automatic payment plan with your credit card company can help ensure that you never miss your minimum credit card payment.
You can request a personal loan from any bank. Banks can extend secured loans against property you own. In this case, that property is money. By borrowing against funds already in the bank, you may make installment payments on the loan and have a positive line of credit inserted in your credit report as a result. Funds borrowed against may be frozen by the bank until the personal loan is paid in full.
If you do not have any collateral to offer for the approval of installment debt, you can find a co-signer to ensure loan approval. The co-signer must have a good credit history. In the event of your non-payment of a loan, the bank will approach the co-signer to demand these payments.
To build a good credit score following a short sale or a foreclosure, you should seek professional help. You can do this by visiting www.floridashortsaleshelp.comfor all real estate and short sale related advisories.
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