Will a Palm Beach County Short Sale hurt my credit the same as a foreclosure or bankruptcy?

This question is asked of me very frequently but it involves a number of unique variables. The first thing to keep in mind is that the moment you are 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureaus that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. The more missed mortgage payments, generally the bigger hit your credit score takes. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse.

After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reported on their credit report. When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language used. If your home were to go to Foreclosure you would most likely see the bank report “Foreclosure” on your credit report. It is difficult to gauge how much damage will be done to your credit score when comparing a Short Sale to Foreclosure.

We strongly advise you to work with a Credit Repair Company and Credit Scoring Expert for more specifics on this topic, and  for ways in which to improve your credit after the Short Sale is complete. We have had a number of  clients able to Short Sell their homes without ever missing a payment. Therefore, they do not have any late payments reported to their credit. When there are no late payments, your credit score is generally not affected much. It is possible to maintain a high credit score by completing a Short Sale without missing payments on your mortgage and other bills. Please be aware though, that your lender will still report that a Short Sale was done. So, while you may not see your credit score drop if you continue to make payments through the completion of the Short Sale, you’ll still likely have your account marked as “paid in full for less than the full amount” and/or “settled. There are some very new short sale guidelines set to come into effect…the one dealing with credit reporting is as follows:

If you think that you may be a candidate for a short sale…please call me. 561.602.1258

Thanks for reading…Steve Jackson