How your Credit Score is affected by Short Sales & Foreclosures

Not all sellers are aware of how short sales and foreclosures can and do affect your credit score. The bad news is that whether you are going through a short sale or foreclosure your credit will be affected in the same way. For example if you have a credit score of 680 before a short sale or foreclosure it will drop anywhere from 200 to 300 points depending on the overall credit. Also in some cases a seller may be subject to a deficiency judgment for the difference in the loan amount and amount paid.

The lender has the choice of doing this in a short sale or foreclosure. To further investigate if you are in danger of this happening to you contact a real estate lawyer to assist you. The good news is a consumer can normally buy a new home after a short sale within 2 years and 3 to 5 years after a bankruptcy. This could vary depending on how well the consumer maintained good credit after the short sale or bankruptcy.

Bottom line is you cannot maintain your credit score after a short sale or foreclosure but if you are able to regain a good credit score there is light at the end of the tunnel. You can and will be able to buy again. Don't worry this unfortunately is very common these days. I'm just glad that consumers are able to bounce back from this and are able to buy again.

Comments are welcome!

Deana Smedlund