Because I am a Certified Distressed Property Expert, I have families ask me all the time as to whether a short sale will show on credit. The answer is no, but let me go into a little more detail.
Short sales are not something that are reported, and that is because they are arranged differently by the bank. The short sale is actually “debt forgiveness”, in the lender’s eyes, therefore the short sale will not show on credit. So, the term “short sale”, will not be on your credit report. However, keep in mind that you’re not completely out of the woods. Your mortgage will certainly show any late pays that you have, and it should appear that your mortgage is paid as agreed, or is settled. So, again, “short sale”, will not appear on the credit report.
The short sale not appearing on credit, will also not affect your credit score as deeply as doing a foreclosure. Having slow pay, and a mortgage showing as “settled”, will only drop your scores about 50 points, whereas a foreclosure will drop your score from 250 to 300 points. In addition, when filling out a mortgage application, or 1003, there isn’t a place to mark that you have had a short sale. However, the application does have a spot for you to indicate that you have had a foreclosure.
Although we face tough economic times, a short sale is not the end of the world, but a short sale won’t be on credit either. When you think about the end result of doing one, think of your family first to help steer you in the best direction.
-Mayer Dallal
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