How Does a Foreclosure or Short Sale Effect My Credit Score?
Tim Lorenz Real Estate Agent Mission Viejo, CA (949) 874-2247 Contact Profile
Some ask how does a foreclosure or a short sale effect my credit score. With the credit score and the effects on purchasing a home in the future. Well here is the way most lenders look at the problem.
A short sale and a foreclosure are seen as the same in terms of a credit score. Both will lower the score initially 100-150 points depending where the score originally started. Being late 30 days on a house payment can cause the score to drop 100 points. Under all scenarios, the higher the original score the larger the initial point drop.
scores may be the same for both a foreclosure and a short sale, Fannie Mae sees someone with a short sale as a better credit risk. Financing is available after 2 years on a short sale as opposed to 5-7 years after a foreclosure.
In some cases, borrowers can get a higher credit score in just a few months and climb back to a good score depending on how the short sale is reported to the credit bureaus. After 7 years the foreclosure or short sale drops off the borrower's credit file.
By Tim Lorenz Real Estate Agent with TIM LORENZ - Elite Home Sales Team BRE# 00919781
Posted on April 12, 2011 12:59 AMSource: activerain.com