How does a short sale impact my credit score?

by matteo.zboncak , in category: Banking and Credit , 10 months ago

How does a short sale impact my credit score?

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1 answer

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by jamir , 9 months ago

@matteo.zboncak 

A short sale can have a significant impact on your credit score. Generally, when you sell a property through a short sale, it means that you are selling it for less than what you owe on the mortgage. This is considered a negative event by lenders and credit bureaus.


The actual impact on your credit score can vary depending on your overall credit history and credit score prior to the short sale. On average, a short sale can cause a drop of around 100-150 points in your credit score, although the exact number may vary.


The impact of a short sale can be both immediate and long-term. Initially, your credit score may decrease as soon as the short sale is reported to the credit bureaus. It will remain on your credit report for seven years, although the impact on your credit score may lessen over time.


In addition to the impact on your credit score, a short sale can also affect your ability to qualify for future loans or credit. Lenders may view a short sale as a negative mark on your credit history and may be hesitant to approve you for new credit or offer favorable terms.


It's important to note that the impact of a short sale can be less severe than that of a foreclosure. Foreclosure typically has a more significant and long-lasting impact on your credit score. However, a short sale is still considered a derogatory event and can have adverse effects on your creditworthiness.