Credit Scores and Their Impact

The Impact of Credit Scores

A short sale and a foreclosure are seen as the same in terms of a credit score. Both will lower the score initially 100-150 points depending where the score originally started. Being late 30 days on a house payment can cause the score to drop 100 points. Under all scenarios, the higher the original score the larger the initial point drop.
While the scores may be the same for both a foreclosure and a short sale, Fannie Mae sees someone with a short sale as a better credit risk. Financing is available after 2 years on a short sale as opposed to 5-7 years after a foreclosure.
In some cases, borrowers can get a higher credit score in just a few months and climb back to a good score depending on how the short sale is reported to the credit bureaus. After 7 years the foreclosure or short sale drops off the borrower’s credit file.

Estimated Starting Score	Approximate Time to Return to Original Score	Credit Distress
680 720 780	680 720 780	30 Days Late On a Mortgage Payment
Will Reduce to Approximately	Estimated Recovery Time
600-620 630-650 670-690	9 Months 2.5 Years 3 Years
680 720 780	680 720 780	Short Sale or Deed In Lieu of Foreclosure
Will Reduce to Approximately	Estimated Recovery Time
610-630 605-625 655-675	3 Years 7 Years 7 Years
680 720 780	680 720 780	Foreclosure or Short Sale With Amount Of Unpaid Balance Disclosed
Will Reduce to Approximately	Estimated Recovery Time
575-595 570-590 620-640	3 Years 7 Years 7 Years

Robyn Seymour CLHMS SRES ABR CRS GRI
Prudential California Realty
949-793-5088
Robyn@RobynSeymour.com
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