When you find yourself in a situation that can adversely effect your credit, then you will no doubt want to seek a remedy that can prevent it.

One such occurrence that falls into this scenario is a foreclosure. It can damage your credit and possibly land you in bankruptcy.

One way to avoid the situation and save your credit is to do a short sale before your home is foreclosed. A short sale is when you sell your house for less than its true value. If the lender agrees to the short sale, then you also need to get him to agree to issue one of three reports to the credit bureau — “Paid-Settled,” “Paid-Satisfactory,” or “Unrated.” By so reporting, your credit rating stays pretty much intact. Why are they willing to do this? Because the lender wants to get something back on his or her investment. By selling your home they can be assured of that. If, however, the lender just went on with a foreclosure, then he or she could lose tens of thousands of dollars in expenses for going through the foreclosure, for fixing up the home for re-sale and for marketing and selling the home.

But you need to do this before you are late with payments. If you are late with payments to your mortgage, the lender will often report this. This goes on your credit record and effects your credit standing. Moreover, if a lender files a “Notice of Default” (NOD) with the county court, then that little piece of information becomes public record and can also find its way to your credit because it is available to all who do a public record search. Bankruptcies and judgments are also discovered in this manner. There’s pretty much nothing you can do about that. However, if you are able to negotiate with your lender that he will report a “Paid-Settled,” “Paid-Satisfactory” or “Unrated” to the credit organizations, then you have something you can show to a future lender and the hit on you won’t be so hard.

You need to keep in mind that one third of your credit score is effected by your payment history. That is based on how much you owe and how long you’ve had the account. If you do a short sale and are still delinquent in paying your mortgage, then that goes on your credit record.

A short sale performed with no late payments on your mortgage can save you from all of this.

You can find out more about how a short sale can effect your credit by obtaining a video that describes the subject. The video is available through the internet.

And watch this video on short sales and foreclosures. This is a screen shot — just type in your email and I'll get you to the real video. Thank you.