Beware the short sale

A short sale can seem like a good way out of a sticky situation – but tread carefully when considering putting up your property for a short sale. RIS Media reports that a short sale can hurt your credit rating for the long term…

“Both short sales and foreclosures are considered negative by the score, because our data shows us it’s very predictive of future credit risk,” Tom Quinn, Minneapolis-based Fair Isaac Corp.’s vice president of FICO scores, said. “The claim that doing a short sale is not going to hurt your score is false. It’s inaccurate.”

There are some exceptions…

That’s not to say that there aren’t some instances where short sales are better. If a borrower is current at the point of a short sale, for instance, then the consumer’s credit score won’t sink as far as it would have if he hadn’t made a mortgage payment for six months. Still, Fair Isaac says that the benefit from not having prior delinquencies on file pales when compared with the hit a score takes from a short sale.

Check out the article for more information on short sales and foreclosures, which can sometimes be a better decision.

Submitted by Minnesota Realtor, Mary Rugani

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One Response to Beware the short sale

  1. Jeff Ragan says:

    I agree. Fair Isaac released a report that says credit scores are affected about the same, whether a seller does a short sale or foreclosure. Fair Issac says the average points lost on a FICO score are 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 Cheers!Jeff

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