Surprising short-sale impacts on credit

The higher the credit score, the longer it may take to fully recover
Published on Nov 30, 2011

DEAR BENNY: What impact will a short sale have on my credit rating? Will it be better for me to let the property go to foreclosure? --Kristine DEAR KRISTINE: That's a tough question to answer because, to my knowledge, the various credit rating agencies have different approaches to determining ratings. More significantly, once you start falling behind on your monthly mortgage payments, your credit rating is already falling, so its difficult to separate the bad credit from the impact of a short sale. One of the most prominent credit reporting companies that mortgage lenders rely on is known as FICO -- formerly known as Fair Isaac Corp. In March 2011, under the heading "Research looks at how mortgage delinquencies affect scores," some interesting statistics were presented. To summarize: there is no significant difference in score impact between a short sale, deed-in-lieu or foreclosure;in general, the higher your score before you have financial problems, the longer i...