How to Get Credit After a Short Sale

Start getting approval letters again by taking the right steps.
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Nobody wants to go through a short sale. After all, a short sale has the same bearing on your FICO score as a foreclosure. But when circumstances cause you to face the loss of all your savings and a likely foreclosure, it may be your best option. Once the process is finished, you just want to move forward -- and you can. You can get credit following a short sale, when you know where to focus your efforts and your money.

Step 1

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Stay on top of monthly bills. According to the Federal Trade Commission, late payments and debts that go to collections affect your credit negatively. Keep accounts in good standing, including utilities or cell phone bills. Strive to catch up on accounts that have been past due, and keep them current.

Step 2

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Pay off debts. MyFico.com reports that paying down revolving credit, but leaving the accounts open, is the most fruitful method of improving your credit score, which improves your chance of obtaining credit even after a short sale.

Step 3

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Add positive information to your credit reports. If your short sale is on your credit report, but smaller, yet positive accounts such as credit unions and local retailers are missing, ask the credit reporting companies to add these accounts to your future reports. The Federal Trade Commission states that most will do so, although they may charge a fee.

Step 4

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Use secured credit cards. To obtain a secured card, you must maintain a savings account that acts as the security line for that card. The FTC advises that you ensure the card issuer reports to the credit bureaus, so that you can use the card to rebuild your post-short sale credit score, and eventually obtain unsecured accounts.

Step 5

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Apply with local lenders. Small, regional retailers and credit unions are often more likely to extend credit to customers with dings on their credit reports, such as a short sale. Be prepared to start small, and possibly put a downpayment on part of the amount. If you are approved, pay the debt off in a timely manner, and then apply for a slightly larger loan to continue building your credit.

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