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How Does Your Credit Score Gets Affected In a Short Sale vs a Foreclosure?

By
Managing Real Estate Broker with Maxus Realty Group of Samson Properties Broker - Realtor - CEO

Short Sales Maryland

 

For the month of May 2011, Herboso & Associates will post one post per day highlighting the reasons why you should do a short sale before you lose your property to a foreclosure.

31 Reasons WHY 
YOU SHOULD DO A SHORT SALE BEFORE
ALLOWING A FORECLOSURE IN YOUR PROPERTY
short sales

Day #2 --Reason #2

Your Credit Score


 Did you know that a foreclosure on your record could impact your life for the next 7 to 10 years?

No one really can tell you the exact outcome of your credit score since your credit is affected by many variables and add the fact that the FICO score is a constantly evolving process and changes over time. 

Understanding also that your credit is also a credit rating composed of three different credit reporting agencies: Equifax, TransUnion and Experian.

How does a short sale affect your credit? 
I can begin with comparison to the "Other" alternatives, the foreclosure and a deed in lieu of foreclosure. Based on reports and my experience, a short sale is about 200 points less damaging to your FICO score compared to a foreclosure.

Short sales do not impact your credit scores directly by the actual short sale but the months of late or no payments made on your mortgage leading to the short sale itself.
Of course the less number of late payments, the better your “credit report”…to a certain degree

Don’t fool yourself that a credit score is the major preoccupation in a short sale. .

 Not for a long shot. . a deficiency judgment is your worst enemy.

 

 

     

                                                   

 

 

"Government and Bank Approved Programs Available to Those Who Act"

 

 

 

The Realtor’s Realtor:

 

The biggest compliment I can have is when colleagues ( other Realtors) call on us to do their OWN short sales. . yes, we helped other Realtors avoid foreclosure as well

 

Read More Here. . .

 

Maryland Short Sales Realtor

Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Great points, Fernando.

    Strategic Default, Short Sale - as you say, the possible Deficiency Judgment is your worst enemy.   I advise Sellers to consult with an Attorney (no matter how broke they are) before Defaulting on a Financial Obligation.

May 02, 2011 02:28 PM
Janet McCarthy
San Diego Homes Guide - San Diego, CA
Broker Associate

Thanks for educating me. I didn't know it was a 200 point difference between a foreclosure and a short sale on your credit report.

May 11, 2011 12:39 PM