The credit consequences of a Short Sale and Foreclosure vary slightly. The general consensus is that a short sale will show up on your credit report as a 'settlement', 'settlement for less than owed' or a "pre-foreclosure in redemption". Also, since most lenders will not consider allowing a short sale until a few payments have actually been missed you may also have a few 'lates' on your credit report. Neither of these marks is a good thing to have but it's possible to get them off of your credit report within a few years or less. A Short Sale can drop your credit score by 80-100 points. There is also the possibility that through negotiation with the lender you can avoid having the short sale reported to a credit agency.

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