How Short Sales, Deed-in-Lieu, or Foreclosures can affect Credit Scores

Jeff reclining here in Roseville and

Rockland calm I am sitting with Jeff

sites who is the credit guru yeah we

might say that we own I own blue water

credit we're a local credit restoration

company and Jennifer asked me today how

does a short sale or foreclosure affect

your credit score that's the million

dollar question

so according to FICO and no one threw a

tomato at me please this is not my

information according to FICO a short

sale a foreclosure and indeed in lieu

have the same effect on your credit

score hmm

typically if you have a high credit

score say like 750 you're gonna lose

anywhere from 80 to 160 points so on the

short sale foreclosure or even lube now

what continues to push the score down as

if there's late payments on the account

so if you have late payments on it but

prior to short sale or foreclosure that

will push the score down even further

okay so the credit score itself it's

only going to drop 80 to 100 points

right maybe 200 points based on a short

sale or foreclosure now it would it

would it would drop more if you had a

second loan because then you're gonna

have two accounts reporting with

negative information so if you're

maintaining your other credit your other

positive credit your credit cards your

car payment you're if you're maintaining

all that you should see your score I

guess drop I mean to a hundred points

yeah hundred hundred forty points so

realistically if you have a high credit

score before the short sale or

foreclosure it's probably going to push

you down in the mid to low six hundreds

now the key with this is your credit

card balances because thirty percent of

your score has to do with your credit

card balances and if you can keep your

credit card balances low that will help

your score be a lot higher through this

process now a short snail foreclosure

indeed blue they all report on the

credit report seven years from the date

of first delinquency so it's seven years

from that first missed payment or seven

years from the date that account was

settled for less simple balance now this

is got a boring but let me give you

another scenario so say say for instance

you lost 100 points

the short sale or foreclosure it reports

for seven years well every month that

that account ages you start to get a few

points back so three and a half years go

by you're going to get 50 points back

tweet yeah well so so I guess and what

I'm hearing is is that even though you

may be hind on your mortgage payment

maintaining your other payments is only

going to help you over the long haul to

recoup your score exactly yeah we score

wise yeah we've had clients you know

year after shorts they'll be back in the

seven hundreds as long as their balances

on the credit cards are good and they

haven't let any other accounts go to

only one okay and I just wanted to

comment a little to that because that's

something that I get clients that come

back to me and one of the things that

happens with the short sales obviously

you do see a drop in your score like

Jeff is telling us one of the other big

caveats to that is is the amount of time

it takes for you to be available to

purchase or able to purchase a home

which is another I guess benefit and

doing a short sale rather than a

foreclosure or a demon Lu so it's not

just about the score obviously we've

found a way here to maintain your scores

or at least recoup them quicker but also

knowing that a short sale typically you

can buy a home faster right much faster

again so it's not just about your score

but there are a lot of questions in

regards to score so that's why I might

again all right yeah all right oh but

one last comment um one thing that we're

seeing a lot lately is second mortgages

reporting balances even if it's

purchased money mm-hmm that's a whole

another random idea can of worms yes so

we give it to that believe me data from

the next video all right well thank you

for listening

I'm Jeff of Bluewater credit if you have

any questions you can call our office at

nine one six three one five ninety one

ninety or visit our website at blue

water credit com

Jennifer Kline Roseville and Rocklin

comm nine one six two three zero three

eight am thanks thank you