Short Sales and your Credit Score
Arlington homeowners and homebuyers should know that they have an option other than foreclosure if a situation occurs that results in the homeowner no longer being able to pay for their mortgage. While this can be a very stressful situation, there are options available that won’t affect your credit as much as a foreclosure would. One of the most popular is the short sale.
Many distressed homeowners wonder how a short sale will affect their credit scores. Before explaining how it is affected, let us define what a credit score is. Your credit score is determined by your bill payment history, the amounts you owe, length of your credit history and the types of credit you use.
It is not possible to determine from a credit report if a foreclosure is a short sale, a settled account or a deed in lieu of foreclosure or some other variation of a regular foreclosure. All of these that appear on a credit report are treated as serious delinquencies so they have a negative impact on the score much like a charge-off or tax lien.
While your credit score is decreased by 100 to 200 points on a scale of 300 to 850, the report itself looks much better. A short sale appears much better than a foreclosure because by doing a short sale, it clearly shows that you have done something to deal with the foreclosure instead of letting it go. As a matter of fact, the Fair Housing Association has a loan program in place for borrowers who have had a short sale.
The one way to lessen your credit score deduction with a short sale is not to be late with the payments because late payments are very destructive to your credit score. Go to www.tombrewerjr.com for more information.
