How to Fix Your Credit After a Short Sale

While it isn’t the ideal situation for homeowners, if you had to go through with a Short Sale your credit may be hurting. Luckily, fixing your credit from a Short Sale is much easier to do than fixing your credit after a Foreclosure. While there are many different things you can do to help boost your credit score, these few options are generally the most beneficial when it comes to raising your credit score post Short Sale. 

Related: The Four Types of Real Estate

Pay Your Bills on Time 

This seems simple; however, one missed payment can set you back up to 12 months. Most lenders want to see a minimum of 12 months of on-time payments, so missing one payment after 11 months of on-time payments can start the whole 12-month cycle over again. 

Keep Credit Card Balances below 30%

As soon as you reach a balance of above 30% of your allowed purchase amounts, your credit score will stop improving as quickly. In order to help repair and raise your credit score you should always try to keep your balances below 30% on all of your credit accounts. 

Overpay Your Credit Card Bills 

Whether it’s an extra $5, $20, or in the $100s, overpaying your credit card balances each month will not only lower your credit card balances faster, but it will also show responsible credit usage and payments to lenders. Try to throw extra money toward your principal amounts each month or whenever possible. 

Related: Pros and Cons of a 15 or 30 Year Mortgage

Don’t Open New Accounts

As tempting as it may be, do not open new credit accounts unless it is absolutely necessary. Opening new accounts will automatically hit your credit and change the whole algorithm of balances, usage etc. You should never have more than 3 open credit accounts at once, if you already have 3 open accounts, do you best not to open additional accounts. 

In conclusion, while some of these may seem like common sense, it is harder to actually stick to these few recommendations for the long haul. Your credit will not be repaired overnight, it takes patience and consistency. One slip, one missed payment, or one big purchase can ruin over a year of work. Set payment reminders, set goals for overpayment options, etc. Whatever it takes to stay consistent will help your credit tremendously and allow you to re-enter the housing market in as little as two years post Short Sale. 

If you’re currently searching for a new home in the Miami area, are in need of a qualified seller’s agent to help you list and market your property, or if you have any general questions regarding Miami Real Estate, please feel free to contact our office at any time.