May 31, 2011
Fair Isaac released a report that stated credit scores are affected about the same when considering a short sale or foreclosure. What most consumers do not understand is that when you consider a short sale or foreclosure it is the late payments that mainly affect their credit score. Fair Issac further stated the average points lost to a consumers FICO score were as follows:
•30 days late: 40 to 110 points
•90 days late: 70 to 135 points
•Foreclosure, short sale or deed-in-lieu: 85 to 160
•Bankruptcy: 130 to 240
While there are no immediate advantages to your credit score in choosing to do a short sale, the advantage of doing a short sale versus a foreclosure comes into play when you consider the amount of time it takes to become eligible for a home loan again. With a short sale on a homeowner’s credit it only takes 24 months to be able to qualify for a home loan and with a foreclosure it takes seven years.