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.