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Tuesday, February 22, 2011

Credit Scores After Short Sale or Foreclosure

Credit Scores After Short Sale or Foreclosure

On your record, these are general numbers....:

1) Foreclosure is 7 years

2) Deed-in-Lieu is 4 years. 7 years for second homes and investment properties regardless of LTV.

3) Short Sales is 2 years

4) Bankruptcy is 4 years

According to TransUnion,  foreclosure won't in and of itself impact credit, particularly since it arrives on the heels of hard financial times.

"Foreclosure will be regarded as a derogatory action on a credit report and will have a more serious impact than a loan modification or a short sale, but only if it is publicly reported," ……If a property is going into foreclosure, more than likely the damage has already been done to the person's credit report with missed mortgage payments that resulted in the foreclosure."

Note: its the MISSED payments that do the most credit damage vs the actual short sale or foreclosure. So dealing with your situation, if you know it won't change anytime soon, you should get your home sold using a short sale.

A bankruptcy causes a credit score to tumble a maximum of 365 points and appears on the credit report for seven to 10 years, depending on the type of bankruptcy. Again, if the starting score is already low, bankruptcy will drop that score significantly fewer points than if the starting score is high. So, if you have a B/K and your credit score is already low the actual credit point drop is LESS compared to someone with a higher score.

NOTE:
A licensed real estate agent is neither an attorney nor a CPA….as we all know.

After talking with your attorney and your CPA, talk to me, this is because you will need to do some digging for applicability to your personal financial situation.

 

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