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What Happens To My Credit Score if I Foreclose or Short Sale My Reno Nevada Home?

what happens to my credit if i foreclose

Terrie Leighton Real Estate Agent Reno, NV 775688-6000 Contact Profile

What happens to my credit score if I Foreclose or Short Sale my Reno, Nevada home? Whether you live in Reno, Nevada or Sparks, Nevada

and in most states

the result of a foreclosure or short sale will have the same affect on your credit report .

The first thing you should do prior to making any kind of decision regarding your financial obligations, is to discuss your options with your accountant and/or your lawyer. Only then, after you have discussed your situation with them, should you start to consider a foreclosure or short sale on your home.

What happens to my credit if I foreclose on my property?

A foreclosure on your credit report will pull down your overall credit score by a minimum of 50 (most likely a minimum of 100) to a maximum of 250 points. This range depends primarily on your initial credit score. One of the worst consequences of having a foreclosure on your credit report is that it will remain there for at least 7 years and it will remain a part of public record for life.

Why does my credit score matter?

Your credit score plays a huge role in your life. whether you like it or not. It can affect your ability to rent an apartment, get a cel phone contract, the cost of insurance premiums, interest rates on a home loan and sometimes it can determine if you are the right person for a job. Your credit score can either save you or cost you thousands of dollars over your lifetime.

Your credit score helps future landlords, phone companies, insurance companies, lenders and employers determine if you are someone who pays their bills on time, if you take your financial obligations seriously, if you are dependable, and so on.

After learning the ways a foreclosure can affect your credit score and how it can affect the many areas of your life, you may choose to seek other options besides a foreclosure. Many home owners decide a short sale is a better choice for them.

What is a short sale?

A short sale occurs when you are unable to make your monthly mortgage payment and you ask your lender to accept less than what is owned on the mortgage. You must qualify with a acceptable hardship for most lenders to accept

a short sale on your home.

A hardship can be defined as a change in the financial situation of the homeowner.

Examples of hardships:

Income Reduction

Business Failure

Damage to Property

Death of Spouse


Job Loss



Military Service

Mortgage payments increase (adjustable interest rates)

What will happen to my credit score if I short sale my Reno home?

If you are delinquent on your mortgage payments, or any other payments, your credit score will be lowered. Your credit score could be reduced from a minimum of 50 points to 250 points if you short sale your home. The same reductions as a foreclosure. The range actually depends on your initial credit score, credit history and how many other items on your report that are not being paid.

So why is a short sale better than a foreclosure?

As mentioned earlier, consult with your accountant and/or your attorney. Together you can hopefully come to an agreement that will benefit you and your family. If you choose to short sale your home be sure all terms were agreeable between you and the bank, this is important because it will show creditors that you did all you could to avoid foreclosure on your home.

Some lenders view a short sale the same as a foreclosure while other lenders see that you did all you could to save your property and will be more likely to secure a loan for you in the future. A short sale will also show to future landlords, employers and possible insurance companies that you did all you could do to avoid loosing your home .

It doesn't matter if you live in Reno, Nevada or Sparks, Nevada, your credit score will take a huge hit if you foreclose or short sale your home. If you have decided that you prefer to try to short sale your home, I would be happy to meet with you to provide you with information that will help you in the short sale process. Contact me by email or call me, Terrie Leighton, REALTOR, at 775-846-5424 .

Helpful links for short sales, foreclosures and credit score information:

How Credit Scores Affect Mortgage Rates


Your Credit Score

How To Improve


Credit Scores and Monitoring

Are You Eligible?

Making Home Affordable

Category: Credit

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