How Far Will a Short Sale Affect Your Credit Score?
A short sale is a process of selling a borrower’s house at less then the amount owed against the home loan with lender’s acceptance. All lenders may not permit the short sale process instead of foreclosure only they accept when you house have no equity to able to sale at the market value and also your payments delayed by the last 2 or 3 months. When you feel that you home equity become negative and you are unable to pay off the balance owed, you may take a help of a short sale expert or a real estate agent who will help to talk to the lender’s loss mitigation department to process the short sale.
However a foreclosure may affect ones credit score more then the short sale but according to the FICO report the affect may varies in different cases. So the Fair Isaac Corporation says that for delay of 30 days one may lose 40 to 110 points on FICO score for credit and also for delay of 90 days one may lose 70 to 135 points on FICO score whether a deed-in-lieu of foreclosure may affect credit by 200-250 points. That is why according to the seller’s condition the affect of the both Foreclosure and Short Sale may more or less same.
Some short sale expert or investors give suggestion that short sale is not so harmful to the credit score than the foreclosure. After foreclosure one may get troubles to own or rent a new house or accommodations if the landlord checks his credit reports but after short sale he may silently move to a new house nobody may not know.
It is clear that the short sale affects your credit but not so far or not more than the other like a foreclosure and a deed-in-lieu. It is better to choose short sale if your condition permit.