WILL FORECLOSURE RUIN MY CREDIT?
The housing market can be a brutal battlefield for those who fall behind on their payments. If you are someone who is looking at foreclosure, or even a short sale, and are wondering if it will ruin your credit, you may want to read over this article to see if it is the best move for you and your situation.
How Much Will Your Credit Score be Impacted with a Foreclosure?
According to FICO, if your credit score is 680, a foreclosure will drop your credit score on average by 85 to 105 points. That is a major ding to what you have built for your credit. This will put you into the 500’s and make you a high risk and low likeliness borrower (the crazy thing is you get dinged for the 30 days late and the 90 days late too. This makes for a lot of dings on your credit). This will make it very difficult to get any loans, whether that is an auto, personal, or credit card.
Here Is a Good Breakdown and Estimate of the Average Knocks to Your Credit Score:
30 days late: 40 to 110 points
90 days late: 70 to 135 points
Foreclosure, short sale or deed-in-lieu: 85 to 160
Bankruptcy: 130 to 240
How Long Does a Foreclosure Stay on Your Credit?
A foreclosure stays on your credit score for 7 years on average. This is not saying that your credit score won’t improve within those 7 years, but it will rise at a slower rate and you are much less likely to get approved for anything because you have a massive red mark on your credit score.
Near the end of the 7 years, potentially year 5 or so, you will be able to be approved for loans, but you will have to pay a much higher interest rate. This is something that really can create a pain for your wallet and make you feel like you are burning money.
What Options Do You Have?
If you are starting to fall behind on your mortgage, it may be smart to try and sell the home before a short sale or foreclosure. This means you most likely need to sell it fast. Do you have a relative who can buy it? That is probably your best option, but in all reality, who has a relative who has that kind of cash to pay for your mortgage?
The next best option would be to sell to us, House Kings. We will buy any house, in any condition, within 7 days. This means you can avoid the credit dings and get your mortgage paid off before having any credit issues.
The question for you is, do you want to ding your credit all the way down to the 500’s? Or, should you do the smarter option and sell the home to us? Call us today at 405-233-8831 or fill out the form below and we will reach out to you as soon as possible. All we will need to do is come and look at the property and we can get you a cash offer today!