When it comes to your credit score, FICO states that foreclosures, short sales, and deeds-in-lieu of foreclosure are all "not paid as agreed" accounts and considered the same by your FICOÂ® score. This is not to say that these may not be better options for you from a financial perspective, just that they will be considered no better or worse for your FICO score.
According to FICO Research looks at how mortgage delinquencies affect scores , here are some of the potential impacts you can expect to experience with either a foreclosure or a short sale:
1. Credit score drop â€“ between 100 â€“ 160 points depending upon your starting score.
2. Recovery time â€“ between 3-7 years needed for scores to fully recover (unless actions taken to improve credit scores.
3. Time to new Loan Approval Â â€“ 3-7 years (unless positive actions taken to improve credit scores).
If you have had to endure
the extreme hardship of a short sale or foreclosure, you may even wonder if you
will have a healthy credit report again. The good news is that there are
certainly steps which you can take immediately to begin rebuilding your credit
now.Â Remember, struggling does NOT make
you a failure. You must struggle to reach every great success in life. If you
have had past credit issues like short sales, foreclosures, collection
accounts, judgments, bankruptcy, charge offs, etc. then you owe it to yourself
to make the decision to begin your journey towards a healthier credit report
We'd be pleased to serve as your real estate professionals. If you have a full time agent with a Masters degree in Planning with Finance and over two decades of experience, working for you, you will likely do better in negotiations. I'd be pleased to provide that service. Â
Other Trulia Real Estate Blogs:
Foreclosure Help â€“ What to do to avoid NC foreclosure.
Short Sale â€“vsâ€“ Foreclosure. Which is better?
What is a short sale? How do I sell my home as a short sale?
Should I buy a short sale home?
I am a real estate broker and not advising on legal or tax consequences; if you have legal or tax questions, you should contact a NC licensed attorney or CPA