Bad credit? Fix it.
While it’s easier said than done (much, much easier in fact), repairing your bad credit before making the call to a realtor is mandatory. Look at your credit report and note any black marks such as a foreclosure, late payments, etc. that have occurred in the last seven years. While these marks cannot be removed before the seven-year window has closed, it will give you a good idea regarding how you can fix your credit score.
Get creative when figuring out how to eliminate bad credit. For example, look through a recent credit report and dispute any data that looks like it cannot be verified, is outdated, or simply doesn’t make any sense (i.e. if you can’t recognize the debt), dispute it. Moreover, consider swapping bad debt with good debt by applying for installment loans that will let you pay your debt in installments. It’s like any other type of debt you have to pay monthly, only that it will wipe away old, bad debt for new debt; your score will improve within 1-2 months.
Pay off any credit card debts if applicable.
Payments constitute for 30% of your credit card debt. Thus, getting serious about paying off the bulk of your credit card debt is one of the best ways to ensure your credit score stays healthy away a short sale. While you may not be in the position to eliminate a lot of your debt since you’re considering a short sale in the first place, every bit helps. Keep an eye on your credit score by utilizing free credit monitoring services as you pay off your credit card debt, and notice how much your score is being improved with every payment.
Offset your mortgage payments to pay other debts.
Where are you going after selling your home? If you are moving to a home that is significantly less than your mortgage payments, create a budget that lets you offset your payment schedule to knock out your other debts. Because a short sale will significantly lower your credit score in the beginning, getting off to a solid, strong start by eliminating any outstanding debt is the best way to bounce back from the impact.
We won’t sugarcoat it: a short sale is going to hurt your credit score. Yet, by abiding by these best practices you will find that they will offset the hurt your credit score is going to be feeling for a while. Follow these tips, and your credit score may stay fairly healthy during the seven years the short sale stays on your credit report. Use those few years to really stay on top of your credit score and continue to keep improving it. By doing so, you will come out of the other end of the tunnel with a credit score nobody will scoff at!