 TITLE: How Does a Short Sale Affect Credit? CONTENT: Does a Short Sale Show Up on Your Credit Report?\n------------------------------------------------\nA short sale will show up on your credit report, but you might miss it if you don't know what to look for. That's because you won't actually see the words \"short sale.\" Instead, your mortgage loan account will have special codes applied that label it as \"settled\" and \"account legally paid in full for less than the full balance.\"\nOnce your credit report is updated with this information, you may see your credit scores drop. Because payment history is one of the most important scoring categories, settling a debt may have a large negative impact.\nYour exact point change will depend on the other information in your credit report, the scoring model and whether your lender reports a deficiency balance. When a deficiency balance is reported, the short sale might impact your credit scores like a foreclosure or deed in lieu of foreclosure would. Short sales without a reported deficiency balance could hurt your scores less than a foreclosure.\nThe overall impact on your scores may also be less if you didn't miss payments before selling the home. In contrast, foreclosures are always preceded by late payments.\nCredit scoring aside, a short sale can also be a better option than foreclosure because you won't need to wait as long to qualify for an FHA loan if you want to buy another home. END