Credit Impact of Short Sale

Credit Impact of a Short Sale A foreclosure on your credit report can take 7-10 years to remove. A foreclosure may also cost your credit rating or FICO Score upwards of 200-280 points. This is a significant hit on your credit.

If no better alternatives are available to you, then you want to consider aggressively pursuing a short sale and avoid foreclosure.

The credit consequences of a foreclosure and short sale vary. The general consensus is that a short sale will show up on your credit report as a “settlement”, “settlement for less than owed” or a “pre-foreclosure in redemption”.

It used to be that most lenders would not consider allowing a short sale until a few payments were actually missed. Because of this, you may also have a few “late payments” reported to the credit bureaus.

The market is ever-changing and many lenders today will consider a short sale if a homeowner can demonstrate a “hardship” or “impending hardship”.

Marks such as late payments and a short sale are not necessarily good marks to have on one’s credit. However, it is possible to organically restore one’s credit following a short sale within a couple of years. A short sale may impact a credit score by 80-100 points.

There is also the possibility through negotiation with the lender that you can avoid having the short sale reported to a credit agency. This is another important factor in choosing who you hire to manage a short sale.

Kathleen Daniels (56 Posts)

Are you facing foreclosure? San Jose Real Estate Agent, Kathleen Daniels wants you to know there are foreclosure options available. You can avoid foreclosure and save home from foreclosure. Understand the foreclosure alternatives that can save your credit.Our team of San Jose Short Sales professionals can help you avoid foreclosure. Short Sales are viable options for many homeowners facing foreclosure.Call 1-800-972-1822 or visit San Jose Short Sale Specialist and request a free consultation.

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