If you sold your house through a short sale, you probably were facing foreclosure and convinced your bank or mortgage company to allow you to sell the home for less than what you owed on the mortgage. The term "short sale" doesn't appear on your credit report according to Experian, one of the three nationwide credit bureaus. Instead, the transaction is listed as "settled," meaning that you resolved the balance on the mortgage by paying less than the full amount. That's a red flag to other lenders, who may feel you cannot be trusted to pay your debts in full.
Print a copy of your credit report from the website Annual Credit Report -- established to provide free credit reports as mandated by the Fair Credit Reporting Act. The website (see Resources) was established by the credit bureaus to provide free credit reports as required by the Fair Credit Reporting Act.
Check the date of the short sale or settlement on your report. When did it first appear? Legally a negative entry such as a foreclosure, short sale or settlement can be listed for seven years. You can have it removed If it has been listed on your reports for longer than seven years. Challenging outdated information is your only legal recourse for removing negative information from your credit report, unless the information is inaccurate.
Write a letter to the credit bureau at the address on the credit report. Point out that the short sale listed on your report does not belong to you (the information is inaccurate) or is outdated and should be removed. Or enter a dispute online (see Resources). Expect a response in about 30 days.