How to rebuild after Short Sale

[ilzhoefer]

Has anyone else gone through a short sale?

I am looking for tips and advice on how to properly rebuild my credit after going through a Short Sale.

I am not responsible for the deficiency and it should be reported to the credit bureaus as such.

Any help is appreciated.

[StartingOver10]

Is that your only baddie?

[ilzhoefer]

I am going through another Short sale (One was a rental home and now the primary residence) and it should be completed within a few months. No other delinquencies. Credit cards do have a balance, but paying them down.

I was married, now divorced.

[StartingOver10]

Once you complete this new short sale, you should start to see an increase in your scores.

I don't think you will see any increase while you aren't making mortgage payments (assuming you aren't paying during the short sale process).

Then, when both of those are finished, you should start to see a slow rebound fairly immediately as long as you continue to pay down your revolving balances since there are no other dings. By the end of two years, you should be recovered completely. Some people recover more quickly and actually end up with a higher score ultimately.

[ilzhoefer]

Thanks.

Right now my score is 670, will go down a little more when the second one closes. I can't even get a car loan with favorable terms as they see these 2 huge balances and are afraid. I tell them they are real estate loan, (Short sales), and they seem to only care what's on paper and not someone's story and job, etc....

Should I pay off the credit cards in full or leave a little balance?

[StartingOver10]

Be careful here. Don't incur new credit such as a car loan while you are finishing up your short sale.

I sell a lot of short sales. The servicer will pull your credit just before the final short sale approval (weird, isn't it). I have had them actually say they don't want to approve short sales if you are out seeking additional credit. They question your hardship status if you are applying even for a cc much less a new car. The other issue is then they may approve the short sale but not waive the deficiency if they think your hardship is bogus.

Take the time to finish this short sale, then get a newer vehicle.

Same thing about your cc balances, you can pay them down but if you pay them off during the short sale process they question your hardship. Just be careful.

[ilzhoefer]

You are absolutely correct.

I was unsure of the second SS, but now that we are going through with it, I will not seek a new car loan.

Is it ok to see if they will raise my credit limit on some of my credit cards? or is that frowned upon as well?

[StartingOver10]

It is frowned upon as well.

The servicer/lender is not supposed to use your credit as an indicator - but they do. The negotiators get PO'ed if they see you seeking any kind of credit - including increases in your limits. The idea is, if you are having a true hardship, and you are asking the bank to take a hit for the balance of your mortgage - why are you out getting more credit with other lenders?

I actually had a negotiator say within the past couple of months that the seller's credit was "too good" because his score was "too high". It almost prevented him from getting the short sale approval. But he ended up with the approval, it just took an extra 30 days because of his score being too high. Crazy, right?

Finish your short sale first, then repair and improve your credit. Good luck.