Short Sales Foreclosures & Your Credit In San Diego

Once a foreclosure or short sale takes place in San Diego you must immediately begin rebuilding your credit.  Currently you are eligible to obtain a government backed loan such as VA or FHA after 3 years from the date of the trustee sale or the date purchased if it was a short sale.  The only exception to that is if it was an FHA loan it is 3 years from when HUD reimburses the investor with the MIP payout.

In the following 3 years you must monitor and repair the damage from the short sale or foreclosure.  My recommendation for do it yourself is Privacy Guard. It’s $14.99 per month and every 30 days you can see all 3 credit scores, all credit items owed and the status of each debt.  If it was a foreclosure you will want to make sure that your mortgage payment was not reported any later than the month of the trustee sale.  If you have 2nd or 3rd mortgage liens you may notice they did not get eliminated with the trustee sale and they still show full outstanding balance.  This is one of the primary reasons why a short sale is a better option than foreclosure.  The 3 credit scores from Transunion, Equifax, and Experian are the most representative of the true credit score pulled by a lender that I have ever seen in comparison to all other similar services.

You do not want to dispute your credit items.  This only makes things worse.  When you dispute a tradeline the credit bureaus are not allowed to score the tradeline.  Therefore when going to obtain a new mortgage loan in the future, a lender will not allow you to purchase with derogatory disputed tradelines because they interfere with an accurate portrayal of your true credit score.  It can take up to 6 months to undispute items and wait for a credit rescore.  Of course if after short sale/foreclosure you still have auto loans, student loans, and credit cards that you will be paying on time much of the advice below is not necessary.  It’s primarily for those that had limited additional credit or filed bankruptcy and eliminated all credit.

Tips:

• Pay your bills on time
• Re-Open new credit cards as soon as possible I’d start by applying for a secured card to make sure you aren’t denied
• Don’t close unused cards try to use them frequently for very small purchases paying them in full each month AFTER the bill arrives.  Do NOT pay them before the bill arrives or your credit report will never reflect a balance owed with a subsequent payoff.
• Keep credit inquiries to a minimum which is why I suggest applying for 2 secured cards to start with for the first 6 months to avoid being denied
• Pay off all old collections, judgements, ect You now need to prove that you can manage your finances after getting out from under mortgage.
• Build up your credit card collection to 5, 3 major and 2 department store cards.  You want to show the lender in the future when applying for a major purchase that you are able to responsibly manage multiple credit obligations
• Keep balances very low in relation to the limit the creditor extends to you