How Does a Short Sale Affect your Credit Score?


Yesterday I shared an article about the impact of major credit events on the timeline of buying a home.  Today’s article is focused on the impact of major credit events on credit scores themselves.  Please see below for further information.

I’ve had multiple conversations both with Realtors and with consumers about short sales, modifications and foreclosures.  Specifically, what is more harmful to a credit score – foreclosure or short sale?  Based on the chart above, it would appear that short sales impact credit scores less than an actual foreclosure.  But it doesn’t appear that credit scores fully recover more quickly with a short sale compared with a foreclosure.

If you would like to know more about how long it takes to be eligible for a mortgage after a major credit event, please click here

Over the course of the next few years foreclosures, short sales and bankruptcy will truly have a major impact on lending and real estate alike.  It will be important for consumers (and industry professionals) to have access to accurate information.  Buying a home after a major credit event can be tricky at best.  Hopefully this information helps simplify things a bit.

Advertisements

3 thoughts on “How Does a Short Sale Affect your Credit Score?

  1. Hi Mark,

    I agree with the graph that says that your credit score is not hurt as much by a short sale, but I am not so sure about the second graph that says that the recover time is the same. Where did these graphs come from?

    Thanks,

    Brian

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s