How does a short sale affect your credit score?
How does short sale affect credit scort?
There is great debate between the benefits of a short sale as opposed to allowing your house to go through foreclosure. Short sales cause your credit score to drop some. The range depends on how the lender will report it to the credit bureaus and other factors. However what are clients have reported directly back to us after a short sale has been successful is a drop between 50-100 points. Obviously that is not a drop that anyone wants on a credit score. However, compare that to some of our clients who reported back to us after they went through a foreclosure and their credit dropped up to 300 points.
The score itself is a big difference, but the time frame in which you can restore your credit is also important.
After a short sale your credit can be restored most of the times within one year.
This year we were able to help one client with his house in Saint Louis County. We were successful in negotiating with the lender and the short sale went through on June 19, 2009. Just under four months later, on October 14, 2009 he was moving into another house that we just helped him purchase with an FHA loan. A foreclosure will stay on a credit report for seven years from the foreclosure date.
Not only does a foreclosure damage your credit far more, but it also takes much longer to repair your credit. These are the specific results that we have had with our clients. We work with over 60 clients per year. While other articles you find may give you different numbers and different facts, we have taken all of our numbers from our clients directly. These are some real results in the Saint Louis area.
Read our previous blog entry about homeownership risks.
Tags: Business_Finance, Federal Housing Administration, FHA loan, Foreclosure, Mortgage, Real estate, Real property law, Saint Louis County, Short sale