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The impact of short sales and foreclosures on your credit score
The impact of short sales and foreclosures on your credit scoreby Katerina Nikolas Faced with the prospect of losing their home many people also worry about the negative impact it will have on their credit score. Despite current financial difficulties they often consider how either a short sale of foreclosure will limit their future ability to borrow money or enter the housing market again. Homeowners often consider their credit score as one of the factors determining whether they opt for a short sale rather than wait for a foreclosure.There is quite a lot of misguided advice available regarding the differing impact that short sales and foreclosures carry related to the credit score system. Real estate agents often assure owners that short sales will have less impact on credit scores than foreclosures, without being in a position to determine this without being fully appraised of the overall financial situation of the owner.The crucial difference isn't really in the immediate effect that a short sale or foreclosure makes to the credit score, but rather to the long term effect on the credit report. Foreclosures will show as such on credit reports for a minimum of seven years, and up to ten, and are viewed as only secondary to bankruptcy in the ... more
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