Financing in 80247>Question Details

Dana Williams, Renter in Aurora, CO

What is the best way to begin rebuilding credit after a short sale? My husband and I don't have credit card debt, but we have medical bill debt.

Asked by Dana Williams, Aurora, CO Wed Jun 15, 2011

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Hello Dana!

Sigh! If only you had asked before the short sale was finalized. However, you might still have some luck with the lender in asking that the amount of the bank's loss be removed from your report.

Here are some suggestions and an answer supplied by Yahoo that is very specific to your situation:……………

Hope that helps. And by the way, I do hear that a short sale is better than a foreclosure, though one of these articles takes issue with it. I would say your discussions with having the bank remove the dollar amount on the short sale might be enhanced by reminding them you chose the route that would cause the bank and the neighborhood minimal damage.

Best of luck to you, Dana.

PML of Longmont, CO
720 810 0683
1 vote Thank Flag Link Wed Jun 15, 2011
One of the reasons many people opt for short sales over foreclosures is that short sale credit damage is much less drastic. A borrower's credit score can drop by 100 to 200 points on average after a short sale, whereas a foreclosure brings it down by 300 or more. Still, many are looking for short sale credit repair options to help them minimize the damage - after all, we’re in a market where credit plays a central role in our every move.
So how do you repair short sale credit damage? It doesn't happen in a snap, but there are ways to go about it.

The first thing to keep in mind is that it's your lender, not you, who can remove the short sale from your credit report. The particulars vary from state to state, but short sale credit reporting is generally allowed for up to seven years. Your lender can choose to remove it sooner, but not later. Short sale credit repair often involves negotiating with the lender to clear the record, usually when the score itself has rebounded enough to merit good rates.

Negotiating with your bank

Experts say the best way to negotiate short sale credit repair is to point out that the short sale benefits both parties. Since you didn't let the house go to foreclosure, you do them a favor by taking on the responsibility of selling the home yourself. You may have suffered the short sale credit damage, but in the process you saved your bank thousands of dollars in foreclosure costs and the pressure of having a nonperforming asset in their checkbooks.

Getting informed

Of course, it’s always better to find out what short sale credit damage to expect before completing the deal. Ask your bank how they will report the short sale and try to get them to do otherwise. Or if this isn't an option, ask about short sale credit repair options for after you've closed. Most banks will have credit improvement programs for clients, and since you’re working in their favor, they’ll be more than happy to show you your options.

Rebuilding credit

You can start taking steps towards short sale credit repair as soon as the home is sold off. As soon as you're able, start taking out minor credit and make sure to keep them current. You may not qualify for optimal rates just yet, but each payment you make counts toward your credit score and reduces short sale credit damage. Over time, the little points add up and your short sale credit will be back in the positive zone.
1 vote Thank Flag Link Wed Jun 15, 2011
Go to you bank and get a Secure Credit Card. You will need to deposit an amount of money ,let's say $500.00, they will lend you up to $500.00. You should never expend more the $250.. (50%) and pay at the end of the month leaving few dollars on the balance. This will build your credit. You should not create new debt like buying a car or anything big. Do not cosign for anybody. Pay everything on time.
In general lenders overlook medical debt. Good luck to you.
0 votes Thank Flag Link Tue Apr 21, 2015
Hello Dana,

We have a "2nd Chance" portfolio loan that would allow you to buy again right after a Short-Sale or even a Foreclosure... The requirements are pretty simple, you must have a 20% down-payment and at least a 620 Mid FICO score. You can contact me on my website for more info..

Good luck!

Craig Bosse
Web Reference:
0 votes Thank Flag Link Thu Jan 9, 2014
I have many lender that would be willing to talk to you to start program of get a mortgage.
0 votes Thank Flag Link Mon Dec 2, 2013
Hello Dana,

I would recommend connecting with a local mortgage lender. They can advise you on exactly everything you need to do in order to buy again in a short period of time.

Wishing you the best.

Syan Real Estate
Call/Text: (505) 730-8181
New Mexico Real Estate:
Web Reference:
0 votes Thank Flag Link Sun Dec 1, 2013
- Get a credit and pay your bills on time.
- Keep a record of your utilities payments (internet, phone, etc) provided that you also paid them on time.
- Negotiate with your lender so the short sale will be cleared from your record.

CFS Mortgage
0 votes Thank Flag Link Sun Dec 1, 2013
Get a credit card secured or not secured and keep it forever, maintain a low balance.
0 votes Thank Flag Link Mon Nov 18, 2013

Good answers below. Also:

1. Keep records of all of your lines of credit and pay them on time

2. Pay your rent on time and keep the receipts from landlord.

3. Keep credit card debt down under half of available balance.

4. Pay all utility bills on time and keep the records to show consistency.

5. Make solid payment arrangements on your medical bills and pay on time.

Finally, keep up the good work for 2 - 3 years and you will be back on track to qualify for another home loan. Be encouraged. All is not lost. All the best moving forward.

Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
0 votes Thank Flag Link Fri Oct 12, 2012
0 votes Thank Flag Link Wed Jun 27, 2012
I would speak with a reputable lender on how to rebuild your credit. One step is to get a secured credit card that you pay on time to start rebuilding.
0 votes Thank Flag Link Tue Jun 26, 2012
Dana, one way (which you may find is the BEST way) to address your medical debt is through the HIPAA letter process, that stands for Health Insurance Portability and Accountability Act of 1996 (HIPAA). It is a 100% legal way to remove medical collections from your credit report as you are using U.S. Law as your basis to remove them.

It requires you have knowledge of the HIPAA law as well as FCRA (Fair Credit Reporting Act), and be ready to write some letters and take action. It can be a bit tough to do that research on your own, so a very nice person, named "WhyChat", decided to take it upon themselves and compile all of the information that is needed on a website at - including the legal basis (violations can be pursued by the state attorney general's with annual per violation fines up to $1,500,000 - talk about motivation to comply with the law), step-by-step instructions, links to attorney's opinions and even sample letters for you to copy/use on your own. This process has a very high success rate. I've seen over 15 medical collections deleted from someone's report that way, scores increased over 110 points.

When you are dealing with medical collections, being familiar with HIPAA & FCRA is like going into battle with a bazooka when the collection agencies have a butter knife.

As far as rebuilding your credit, you will want to make sure you have open & active trade lines on your credit report. You should have, in my opinion, at least 3 revolving trade lines (like credit cards, retail store cards, etc.) and 2 installment loans if you need them (like a car, student or personal loan), or if you don't need an installment loan (since it requires a payment each month) then at least 5 revolving trade lines. Utilize the credit cards for normal purchases (gas, groceries, etc.) and pay them in full or (very close to in full) every single month. Right before you apply for any credit, for a maximum score increase, make sure they are reporting $0 balances (you can do this with a monitoring service like

You can read the details on how what factors contribute to your credit score at

Remember it takes time and there is no quick fix. In fact, quick fix efforts can backfire.

You can read, learn, and implement different methods and approaches to Rebuilding Your Credit by browsing through the forums at…

Good luck!
0 votes Thank Flag Link Sat Jun 18, 2011
Hi, Dana. Paying off medical collections once they hit your credit report will be fruitless. Once medical bills hit your credit report its too late, the damage is done and can not be mitigated by paying them off. Re-establish your credit by opening up at least 3 credit cards. Never allow them to go over 50% of their loan limit, never be more than 30 days late in paying them. You typically have to wait 2-3 years after a short sale before your eligible for a morgtage again. Keep your credit card balances low and their history clean of any 30+ lates, you'll be in a great position by then.
0 votes Thank Flag Link Sat Jun 18, 2011
My suggestion would be to Settle with Medical bills or work out payment plan. I have a great loan officer, who understand these challenges. I would be happy to have him contact you. You might consider Owner financing at the begining of purchasing but down payments will need to be 10% or Great for you to have seller finance you.

Rich Plasmeier Great Way Real Estate 303-931-4155
0 votes Thank Flag Link Sat Jun 18, 2011
Hi Dana,

You first need to settle the debt that is owed. If the debt is no longer owed that you do not have to pay it, meaning the statute of limitations has expired and the creditor did not secure the debt.
Next you will want to work on cleaning up your credit reports through credit repair services.
Next you will want to establish credit so that you can prove you are good with credit and debt servicing.
After your credit is in good standing, you then contact a mortgage broker to see how much house you can afford. Thereafter, you begin looking for a home with the Realtor of your choice. I know this is all very boring, but if you proceed this way you will set yourself up for success long term and will not have to go through another short sale or foreclosure in the future.

Good luck!

Hannah Fliegel, FICO Pro
Web Reference:
0 votes Thank Flag Link Fri Jun 17, 2011
Hello Dana,

Suz from Boulder has very good information below. I too know a couple of very good lenders who are doing everything they can to help people rebuild their credit and also help get things removed from the credit report that don't belong there. Let me know if you want their contact information. Whatever you do, it's best not to put it off. Having them look over your credit now may save you some big headaches down the road. Just out of curiousity, how long did your Short Sale take to close? Was your bank responsive with your Realtor? Would you recommend to the many people who may be reading your post that they do a Short Sale instead of a foreclosure?

Thank you,

Sandy Kinslow
The Kinslow Team LLC
0 votes Thank Flag Link Wed Jun 15, 2011
One thing that I have heard is really helpful is to have a parent or someone that trusts you and has fabulous credit put you on their credit card. Not give you a card to use, but just on the card. I have heard that it doesn't affect their credit. Again, this is just something I've heard. Check it out with a reputable lender.
Web Reference:
0 votes Thank Flag Link Wed Jun 15, 2011
As a realtor, it is in my best interest to have qualified and honest individuals to work with. I recommend and use Financial Education Services. Marlene Rose-Vigil will meet with you one on one to discuss your individual credit reports to give you strategies to overcome this hit on your credit. You can do it yourself with her guidance or hire her company to take care of the follow up for you. She has a website where you can go to check out the systems available.. They are AA rated with the better business bureau! 303-564-3248. Also, talk to a loan officer in your area that you can trust and they will give you strategies regarding your credit and medical debt. I believe that some types of loans do not use medical debt problems against you, but again. Call a trusted loan advisor and they can guide you as to different lending guidelines on this type of debt. Good luck with everything!
0 votes Thank Flag Link Wed Jun 15, 2011
First it is going to depend on how they reported your short sale, hopfully you negotaited how they report the short sale as part of your short sale and it wont read negative. Rebuilding credit requires establishing accounts in which you pay on time and keep your balances less than half of your credit limit. Medical debtr will drag down your credit not build it. You should meet with a local loan officer and have them prequailify you, they can tell you what you need to work on so you can get a mortgage some day.
Web Reference:
0 votes Thank Flag Link Wed Jun 15, 2011
Now is the time to start changing the way you live, play, and pay.
If you still have credit cards, we start here. Think of items you pay for out of pocket every day. Lets say Gasoline,
you use $50 each week, Take $200 and put it to the side, you'll need it later. Take card in hand an d buy gas with the same card each week, and pay that card at the end of the month with the $200 you put aside for Gas. Have other cards, buy some groceries, lets say you spend $150 a week on Food, take one week and put it on a card, take the $150 you would have spent and use it to pay that card. This will put positive activity on you card, If you cards have more than 1/3 of the credit used up, pay down the card and keep the balance at just 1/3 on each and every card if you don't have enough then let the balance on the card come up to 1/3 it will help build your points also. Miss no payments. Have your credit scores sent from all three major companies and make sure all items on your reports are accurate, if not remove inaccurate information. Credit will rise within a few months of you doing the right thing. no new toys, no new cars, no new expensive play things, vacations or the like, you will be able to reward yourself later when the scores are higher and you can again flex some financial muscle!
0 votes Thank Flag Link Wed Jun 15, 2011
It depends! By the way you do not have wreck your credit while doing a short sale. If you keep current on your loan payments through the process, It is still possible to get a short sale approved. I know this does not help you now, sorry.
0 votes Thank Flag Link Wed Jun 15, 2011
Go and speak to a local lender who is known for helping people repair their credit.
0 votes Thank Flag Link Wed Jun 15, 2011
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