How does a foreclosure versus a short sale affect my credit score? How long will it show on my credit history?
Many of us have worked hard to establish and maintain a good credit score. Current woes in the housing markets have made a bit of a mess out of otherwise stellar credit scores.
Both options lower your credit score although foreclosures do so more substantially. The average foreclosure can pull your credit score down anywhere between 250-350 points and remain attached to your credit history for 7 years and possibly longer.
If you have remained current on your mortgage payments prior to the closing of your short sale you are in fairly good shape. Once the short sale is complete it is reported as “paid as agreed”. Generally a short sale will drop your credit score about 50 points and its effect can be brief…about a year or two. Be aware though, if you make late payments on your mortgage before the sale of your home your credit score will be affected much more so. As far as your credit history you are in luck! Short sales are not reported on a credit history.
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