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Short Sale vs. Foreclosure ~ How it Affects Your Credit Score

Many homeowners are still facing tough financial situations. Although there have been positive reports on housing and employment, families are still struggling in todays economy. San Diego has been one of the hardest hit and with the announcement last week of General Dynamics laying off over 1200 employees from NASSCO in July, many will still face the challenge of meeting obligations.

There are many misconceptions as to which may affect your credit score in a more detramental way. Short Sale or Foreclosure. According to Fair Isaac, the developer of the software that calculates a score, if the mortgage debt is delinquent, the delinquincy is what causes the credit score to decrease. Both a Short Sale and a Foreclosure are considered “not paid as agreed” and will be scored accordingly and equally.

If you are faced with the potential of being in a position of not being able to make your mortgage payment, the first step would be to contact your lender immediately to see what the alternatives are. Many lenders are participating in new government backed program which was enacted as of April 5, 2010 for Loan Modifications and Foreclosure Alternatives.

If you need assistance or have questions on Loan Modification please give me a call. If you and your lender have determined a Short Sale as the alternative, I am available to assist you through the process.