Short Sale or Foreclosure Fix Your Credit to Buy a Home Again

Short Sale or Foreclosure Fix Your Credit to Buy a Home Again


Fixing Credit After A Foreclosure Or Short Sale during the waiting period is so important.  A foreclosure or short sale marks the end of a very bad Short Sale or Foreclosure Fix Your Credit To Buy a Home Againexperience in a homeowner’s life, and the beginning of the recovery from that experience of tough home ownership.  Once the foreclosure or Short Sale is completed most homeowners begin to think of correcting their financial situation, and being able to position themselves to become homeowners again.   One of the first steps in beginning the recovery is Fixing their Credit.

There is no magical quick way to repair credit after a foreclosure, or short sale.  However, I can make suggestions on the quickest way to accomplish it within the waiting period the homeowner needs to wait before being able to qualify for another mortgage and to buy a home.

The loan program which has the shortest waiting period after a foreclosure, or short sale is FHA.  The waiting periods before you can qualify for a mortgage to buy a home again are as follows:

  • 3 Years after a Foreclosure
  • 3 Years after a Short Sale, if the homeowner went late before or during the short sales process.  But If the homeowner did not go late during that period they may be able to purchase right away if their credit scores are high enough to qualify for a mortgage.

NOTE:  The waiting periods for a conventional mortgage have recently been reduced to 4 years for a short sale.  

 However, if you went through a foreclosure, the  waiting period remained can be as long as 7 years.

In each of the above cases, the homeowner’s credit scores are going to take a hit and be reduced.  How much of a hit will depend on their payment history leading up to the foreclosure or short sale.

Once the  foreclosure or short sale has been completed, it is imperative the homeowner not have ANY late payments on anything from that time forward.

  ANY late payment between the time the homeowner completes a foreclosure, or short sale will increase the above waiting periods.  How much longer a late payment will increase the waiting period will depend on the number of late payments, and the homeowner’s credit score at the end of the established waiting period.

The second thing for the former homeowner to do during the waiting period, is to re-establish credit by doing the following:

    • Pay down all other debts as much as possible which report on their credit report without adding any new ones such as:
    • Pay down credit card balances to no more than 1/3 of the credit card limit, and never go over 1/3 of this card limit.
      • Car Loans
      • Student Loans
      • Other Installment Loans
    • IF the homeowner filed for bankruptcy they most likely included all of the revolving debt listed above in the bankruptcy.  So besides making sure they are on time with all their remaining debts, they have to start to re-apply for new credit cards, or some sort of installment loan.  Once the homeowner has been able to obtain a credit card, or installment loan, their credit scores will start to increase if payments are made on time.  As their credit score increases the easier it will be to obtain more credit.  It is important to make sure credit card balances are kept below 1/3 of the credit limit on the new credit cards, and not get back into the financial situation which caused them to file for bankruptcy in the first place.  The objective is to obtain credit, but use it sparingly.

If the homeowner does what I have suggested above their credit should be at a level where they will be able to purchase a home again at the end of the foreclosure or short sale waiting periods. 

 I have worked with borrowers who had a foreclosure, or short sale in the past who were able to get their credit scores back up over 700 by doing what I have suggested above.  So while there is no quick way to Fixing Credit After A Foreclosure Or Short Sale, the quickest way to do it is to use common sense, pay everything on time, pay down balances as soon as possible.  Good luck!

Short Sale or Foreclosure Fix Your Credit To Buy a Home Again

Info about this post’s author and guest blogger, George Soutu:

George Souto is a mortgage Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or and he knows mortgages and credit.

I appreciate George’s shares on mortgage and credit information in the current real estate times with my web site readers at

Rhode Island real estate agent and licensed RI real estate agent, Ginny Lacey Gorman, helps list all RI homes and waterfront property in Rhode Island.  Contact me today at 401-529-7849 or email me at

 Whether you are buying or selling in the Rhode Island real estate market or anywhere in Washington County, RI I would like the opportunity to earn your trust and business. I am well versed in all types of residential real estate and will ensure your needs are my top priority!