I'm looking for insight (if anyone has any) as to the following questions:
1. Is it better to have a lot of open accounts (that are in good standing) so that the delinquent account looks like a special exception (rather than indicating that I'm a deadbeat)?
Maintaining open accounts through the time period of your short-sale will be an arguable point that the house was an anomaly. The number of accounts really doesn't affect the score. Utilization is a much bigger factor.
2. Should I close some accounts now b/c too many open accounts will increase the risk that some cards will be closed by the issuer.
I wouldn't close any but I would make sure that and rewards levels are spent so that if they do get cancelled, you don't lose anything; e.g., spend the Cap1 Venture points since if that gets closed, you lose it all. As for the annual fees coming up, you were going to cancel (most) of those anyways, right? If so, do the "reallocate your credit line" trick and cancel away. Don't close the cards you've had the longest - these keep your average age of credit accounts higher - which is a score factor. After the short sale, you're probably not going to be approved for much so think about which cards you want to keep that have the best value to you - if it comes to that. None of the big 3 will just cancel all your cards as long as you're current. They may whack the limit or raise the interest rate first.
So, in short, do your credit churning as normal but protect yourself with rewards balances in case they do whack some accounts.
3. Should I consolidate my credit limits into as few of cards as possible so that I have very high limits on only a few cards?
Only if you're cancelling cards you were going to cancel anyways, see #2.
4. Should I ask that my credit limits on certain cards be reduced so that they aren't as concerning to the issuer if they pull my credit report?
No. If they have a problem, they'll let you know. And they'll know what your new limit is. If you call them and ask to lower your limit, you're in the dark and just guessing. You may lower not enough and they whack you again or you may lower too much and you'd be missing credit limit.
5. Does anyone have any experience in a similar situation with issuers closing cards?
I had a kind of similar issue 8 years ago. Business partner A stole 1/2 million from our business. Other partner B and I had some, err, difficulties over the next couple years sorting it all out. I went 60-90 days late on some cards and loans trying to keep the house. Ended up selling the house 6 months later (nice profit too) but the damage was done and I lost a couple cards Amex cancelled my card and gave me an Optima. Get rid of one of those as soon as you can, by the way, you can't have any other amex card if you have one of those. After about a year or so of being sorted out, it's like nothing ever happened. I didn't proactively cancel anything. When I was late, I kept in contact with the companies and spun them the whole story. Most understood - some didn't even report me. Amex was actually pretty nice. Diner's club were a bunch of jerks. I did a couple partial payments of balances to keep some things off my credit report; repaid quicker to expunge the lates.
6. Does anyone have any recommendations for the situation I'll be in after the short sale --- open accounts with good cards but a lousy score. How long will it take to increase my score? Are there things I can do to increase it faster (i.e, carry a balance)?
Carrying a balance doesn't help your score - it just costs you money. I think you'll be right where you ask in the Q. cards with limits (maybe lower) and a lousy score because of the short sale. FI says a short sale can whack 100-200 points off your score and it's the same as a foreclosure, depending on your starting credit score and history. My guess is the being late on payments is a big factor in how much of a hit you're going to take.
As for your short-sale team caring about your credit, I'm with AsherO, they don't really. They're like a special-kind of realtor, they want the deal to close. A reputable (are there any?) credit-counseling company would probably be your best bet for advice.
