Fred Sed's Blog: Valuable Orange County Short Sale Information : Can A Short Sale Save My Credit & Do I Qualify

My last article I explained why a bank would want to do a short sale and would a short sale save your home. In today's article I will explain whether or not a short sale can save your credit, as well as what it takes to qualify for a short sale.

When I get asked if a short sale can save some ones credit, my answer is yes and my answer is no. Sounds confusing..... I will explain why. By the time a person has entered and completed the short sale process they have already missed a few mortgage payments and have had a N.O.D. (Notice Of Default) filed against them. With that said, those two items already damage your credit to a certain extent. But but but, if someone decides not to go through with a short sale or can't do one and the foreclosure process continues, then it would be far worse than a few missed payments.

A short sale and a foreclosure differ when it comes to a credit report in the following way: a short sale (once completed) will show that specific debt or trade line as PAID and will cancel anything that has to do with a foreclosure. A foreclosure, once process is complete and the homeowner is evicted, remains on a credit report for 7-10 years. Which means it will be very difficult for a foreclosed homeowner to acquire any sort of credit in the future. Whether it is a credit card, auto loan, or another mortgage, it will not be easy. A short sale can help avoid this and actually help make you credit better.

For a short sale to work and for the process to be a success the following basic qualifications need to be present:

*Property in foreclosure or default

*Personal financial hardship

*Little or no equity in the property

*At least 60 days until eviction date

If any of these items above are your current situation then a short sale could be possible for you.

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