Have Good Credit but Need to Short Sale or Foreclosure?
Credit implications after a short sale or a foreclosure have been an important topic for many who want to maintain their good credit. The only way to prevent damages to your credit is by staying current on your mortgage(s) payments, selling your home via conventional sale, and paying the difference of what you owe to your lender. Otherwise, whichever direction you go, your credit will be negatively affected.
Today’s post is an explanation of how much impact your credit score will have in a short sale versus a foreclosure and a plausible solution to this problem.
*Please refer to these pictures from the Fair Isaac Corporation for the following information.
Credit impact in a Short sale vs. Foreclosure
As you’ve probably noticed, the difference in credit score reduction between a short sale and a foreclosure is no different contrary to popular myths. However, the verbiage used in reporting your short sale or foreclosure is different. In the case of foreclosure, it will be stated as a “Foreclosure” on your credit report which may be disadvantageous when looking for a job or another mortgage.
In a short sale, your sale will be reported as “settled as agreed” “settlement in full” “Account legally paid in full for less than full balance” or something along the lines of that verbiage. A mortgage company’s decision to allow another loan may be affected by the outcome of your current home.
Also, one important factor all homeowners must know is you do not need to be late on payments in order to conduct a short sale. Hence in this case, a short sale would have a significantly less ding on your credit score as you will have no late payments.
As you can see in the table above, the higher your current FICO score is, the greater the ding will be after a short sale or foreclosure. Question is, would you rather pay a large sum of cash or take the ding on your credit score? Many experts (seattleshortsaleblog included), would endorse cash every time. Why? Because damage to your credit can be repaired overtime whereas cash does not come by as easily.
Here is the best solution we’ve found. Rather than trying to save your credit by doing a conventional sale and paying out cash, we at seattleshortsaleblog highly recommend an accredited credit repair company that can expedite the rebound of your credit score. Simply call Lexington Law consultants at 888-586-6113 to see whether they can help your credit situation. The consultation is free! Hope this helps friends and I hope you had a Happy Thanksgiving weekend.