How a Short Sale negatively impacts your FICO score!

Recently attended a seminar from FICO on the impact that foreclosures and short sales are having on overall credit scores.  What I found extremely interesting is that if a person had an average credit score (around 680) the impact to that score was lessened than someone with a stellar score of 800 and above.  

It takes more time for someone with pristine credit to recover than someone with just average credit in the system. People with pristine credit are more dramatically effected!

The following tables gives examples on four different consumers of the type of FICO 'hit' one would take for each type of negative such as a short sale, foreclosure, etc.

Seems the 'short sale with deficiency' causes the same credit re-score negative that a foreclosure does.  Obviously this is just a simulation but I often have sellers ask me what a short sale will do to their credit.  Each person is different but this is the only chart that I've ever seen that actually shows a consumer what to expect depending on the negative event.

In my own personal experience talking with sellers, how your score is negatively impacted seems to be total guesswork depending on the main credit scoring basics.  

One of the highlights of the seminar was that if you want to raise your credit score, lower your debt.  The more debt you have impacts your score because the system is determining your future default ability.  

Nice algorhythm right?  FICO is the computer 'actuary' of your future payback on your overall debt.

Hopefully this will answer some of your questions regarding short sales and credit score impact in our Northwest Suburban area.