Short Sale effects on your Credit Report

Seller's often wonder whether it is better to go through foreclosure or a short sale when trying to get out from under a property debt. Foreclosures might allow you to stay in the home longer; however, each situation will likely cause the same generally effect on your credit score. A short sale is bascially the same process as selling your property when it has appreciated in value; the difference is in the fact that the lender agrees to accept less than the amount owed against your home. Not all lenders will negotiate a short sale, and that is why a real estate agent or lawyer can be a tremedous help by contacting the lender's loss mitigation department to find out.

Lender's used to not even consider a short sale if you were current with your payments, but that has changed. You must realize though, that lenders will be more agreeable to negotiation if your payments are in arrears. If you do have any cash assets, the lender might try to tap into those accounts to settle some of your debt.

Your credit will take a big hit by going through foreclosure or giving the lender a deed-in-lieu of foreclosure, providing you are more than 30 days in arrears. These hits will take 200 to 300 points off your credit score, depending on the overall condition of your credit. Short sales will often cause the same 200-300 drop in your credit score. Results often vary with some short sales incidences causing only a 100 point drop in your score.

We obviously want to clear our credit as soon as possible after such an event and hopefully get back into a home again one day. A seller will often have to wait 24 to 72 months before a lender will offer any kind of interest that makes sense after such an event. With a short sale you are often able to buy a home within 2 years, where a foreclosure can often lead to a 5 to 7 year waiting period. There are no hard and set rules for either; however, over the long term short sales have historically been less damaging to your credit than a foreclosure.

Keith Dienstl is a member of the Financial Empowerment Network Team and Prime Financial Credit Services
you can also visit Ultrafitcredit for more information on Keith Dienstl.

Your Credit Score Is Yours to Control

Are you confused by credit, and how to create a better credit score? Don't feel bad, many consumers and business people find it hard to understand why their credit score is low. They pay their bills. And when they are a little late on a payment, they pay extra fees to the Lenders to make up for that. The Lenders enjoy great profits, and yet, the Borrower gets penalized more. Is it fair? I say NO! Enough! It's time for us to take control of our credit scores, and get them to reflect accurately, what kind of people we really are. In fact, the United States government agrees. Toady, there are laws to protect us, and allow us to take back control of our credit histories and credit scores.

Use these laws to make sure you aren't forced to pay more for auto loans, credit cards, mortgages, insurance and utilities. Besides costing you more money in monthly bills, we've been hearing more about people who get job offers that are later taken back, because of a "bad" credit score, a result of having been out of work for a year or longer. They didn't use credit to support a luxurious lifestyle. Ironically, they are penalized by taking away the very thing that they need to get back on their feet and to get back to paying their bills. Is it just me, or does it seem ridiculous to you as well? Credit reporting agencies, and Lenders, seem to believe that it's their right to penalize consumers to any level that they choose. The US government says it isn't their right. It is their right to report late payments and defaults on payment agreements, to the extent that they report it accurately. Is the information on your credit report accurate?

Frits Tessers is a member of the Financial Empowerment Network Team and Prime Financial Credit Services
you can also visit Personal Coaching for more information on Frits Tessers.