| What impact will a short sale have on your credit | | | | a credit card's credit limit. For these reasons, it is not |
| score? The correct answer is that it depends. | | | | possible to determine the exact number of credit |
| Your credit score is calculated based on a complex | | | | score points you will lose after a short sale. |
| formula that tries to figure out the likelihood that you will | | | | Although you can't predict the number of points you'll |
| not pay back your debts. The term ‘short sale' is | | | | lose on your credit score, in most cases, the impact of |
| unlikely to appear on your credit report. The number | | | | a short sale will be less than the impact of a |
| of points you'll lose on your credit score after a short | | | | foreclosure. If you are in a financial jam, the most |
| sale will be based on how your mortgage loan was | | | | important question to ask yourself is whether you can |
| closed and on how that closed account was reported | | | | afford to pay your mortgage every month for the |
| to credit reporting agencies. Normally, a short sale is | | | | foreseeable future. As a rule, it is always smart to |
| reported as ‘settled debt'. | | | | try to limit the damage done to your credit report. |
| The higher your credit score is to begin with, the | | | | However, if you are running out of cash, then there is |
| further your score can fall when you have a financial | | | | no good reason to throw away the rest of your |
| hardship. So, the number of points lost on a credit | | | | money in a futile attempt to make a few extra |
| score after a short sale tends to be more severe for | | | | mortgage payments. |
| people who start with a higher score. When you have | | | | If a short sale is the best option given your personal |
| a lower credit score to begin with, the net impact of a | | | | situation, then you need to sell your property as quickly |
| short sale tends to be less severe. No two people | | | | as possible so that you can cut your losses and get |
| have the same credit history or account activity. The | | | | on the road to financial recovery. In this circumstance, |
| effect then of one event like a short sale will be | | | | rather than trying to ‘save your credit', you should |
| different for different people. The financial hardships | | | | focus on completing your short sale so that you can |
| that borrowers often suffer before a short sale (like a | | | | begin building and repairing your credit for the future. |
| job loss) also affect their ability to pay other debts like | | | | The good news is that you cannot permanently |
| credit cards. It's not practical to separate the effect | | | | damage your credit and blemishes on your credit |
| of a short sale from the effect of missed mortgage | | | | report adversely impact your credit score less and |
| payments, missed credit card payments or exceeding | | | | less over time. |