Generally, a short sale is reported to credit agencies as “debt settled for less than full amount owed.”  While this is a negative credit mark, it is not nearly as devastating as a foreclosure. A short sale on your credit could allow you to repurchase a home within two years. It may take at least five years to qualify with a foreclosure. Late payments will also fall off your credit record within two years. If you continue to pay all your other debts on time, your credit score will improve considerably within this same time frame.