Short Sale & Credit
"How Hard do short sales hurt credit Score"
A short sale and foreclosure are things that no homeowner wants to face or go through, but the truth is that in today's market many people are facing these situations. The best thing a homeowner can do is to stay current with her payments. Although it may be hard to sell your home in a bad market, if you do then going through a short sale will have a far less impact on your credit than a foreclosure.
Of course short sale hurt credit score but the real question is "How bad do short sales hurt your credit?" The answer to that question is not simple. It depends on a wide variety of influencing factors to include, number of missed payments, credit score before mortgage delinquency, lender policy, and other credit factors. If you are late in your payments it’s definitely affect your credit score and the more offending the payment, the more is hurts the credit score. Here is the part that most people do not realize, a 120 day late payment gets factored the same as a foreclosure.
However, it should be noted that the reduction in credit score is caused by the payment arrears and not by the short sale itself. Therefore, if you are much less than 60 days, the credit damage will be substantially less than that for a foreclosure. However, the credit damage caused by a short sale may occur when the lender reports the shortage to the credit bureau. This will be noted as a derogatory report for the borrower and this may stay on his report for seven years.
A consumer with a foreclosure or similar default on his credit report can expect his score to begin recovering after a couple of years if he consistently pays all his bills on time, keeps any credit card balances low, and takes on new credit only when needed. As the default event ages on his credit report its influence on his score will diminish, until the credit bureau removes the record from his file after seven years.
----------------------------------
Other Related Articles:
A short sale and foreclosure are things that no homeowner wants to face or go through, but the truth is that in today's market many people are facing these situations. The best thing a homeowner can do is to stay current with her payments. Although it may be hard to sell your home in a bad market, if you do then going through a short sale will have a far less impact on your credit than a foreclosure.
Of course short sale hurt credit score but the real question is "How bad do short sales hurt your credit?" The answer to that question is not simple. It depends on a wide variety of influencing factors to include, number of missed payments, credit score before mortgage delinquency, lender policy, and other credit factors. If you are late in your payments it’s definitely affect your credit score and the more offending the payment, the more is hurts the credit score. Here is the part that most people do not realize, a 120 day late payment gets factored the same as a foreclosure.
However, it should be noted that the reduction in credit score is caused by the payment arrears and not by the short sale itself. Therefore, if you are much less than 60 days, the credit damage will be substantially less than that for a foreclosure. However, the credit damage caused by a short sale may occur when the lender reports the shortage to the credit bureau. This will be noted as a derogatory report for the borrower and this may stay on his report for seven years.
A consumer with a foreclosure or similar default on his credit report can expect his score to begin recovering after a couple of years if he consistently pays all his bills on time, keeps any credit card balances low, and takes on new credit only when needed. As the default event ages on his credit report its influence on his score will diminish, until the credit bureau removes the record from his file after seven years.
----------------------------------
Other Related Articles:
