Recently, I have been getting several inquiries into the effects of a short sale on your credit score. I do want to preface this by stating everybody’s situation is unique and thus generalizing may be over simplifying the situation. If you have always had excellent credit and continue to pay your other accounts (Cars, Credit Cards, Student Loans, etc.) on time you are likely to see a relatively minor impact on your credit. One of our recent clients had a short sale approved on their home in March and currently has a 751 beacon score. That is down about 30 points from the 780 they had previously. Understand in this situation the borrower had impeccable credit entering the situation. In this case below from Americas Servicing Company (ASC) you can see how the account was reported:



Address:

AMERICAS SERVICING CO

7485 NEW HORIZON WAY

FREDERICK, MD 21703





Address Identification Number:

04xxxxxxx



Status:

Transferred,closed/Paid,Closed.



As for a Foreclosure the damage is much more severe.



With a Foreclosure or Deed-in-Lieu of Foreclosure your credit score suffers significantly more than doing a short sale.

Homeowners will take a hit of 300 to 350 points, depending on overall condition of credit. This means if a seller’s FICO score before foreclosure was 680, it could dip as low as 380. In addition it becomes a public record and the judgment remains on your credit report for 10 Years.