What are the credit benefits of doing a short sale vs. foreclosure?
There are two parts and scenarios that need to be considered for this answer. Let’s start with how it will be reported to the credit bureaus. While in cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers will have type of verbiage stating that they worked out a deal with their lender. Such terms reported by lender are “debt settled for less than what was owed”, “debt settled”, “debt discharged” or some other similar verbiage dependent on each lender. A short sale can be less damaging to your credit point wise and there are cases where the damage was as little as 100 points, compared to a foreclosure which mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will possibly reduce your credit score by over 300-400 points. The next situation that plays out as to your credit damage is whether you are late on your payments or not. Once you stop making
