Effect of Foreclosure, Short Sale, and Bankruptcy on Your Credit Score

Posted by: Vern Lazaroff, Esq.
www.vernlazaroff.com

Have you ever wondered what kind of impact a foreclosure, short sale, or bankruptcy would have on your credit score? Well, wonder no more…
According to a recent report from VantageScore Solutions, which is a credit scoring company created by the “big three” (Equifax, Experian, and TransUnion), here’s what you can expect:

• Short sale = 120-130 points
• Foreclosure = 140-150 points
• Bankruptcy = 355-365 points

Apparently loan modifications, where late payments and penalties are rolled into the mortgage balance, can actually have a small beneficial impact on your credit score.
Note that your VantageScore isn’t the same as your FICO credit score. VantageScores range from 501 (subprime) to 950 (superprime), whereas FICO scores range from 300-850.
Despite these differences, the numbers above can give you an idea of the relative impact of the different scenarios. Moreover, your VantageScore is being used by an increased number of lenders, particularly large mortgage lenders.

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