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How Will A Short Sale Affect My Credit Score?

As property values continue to head south, many people are finding themselves upside-down on home loans and possibly facing foreclosure. A "short sale" can provide an alternative to foreclosure if you're able to negotiate a deal with your mortgage lender to take less than you owe on the loan and consider the mortgage paid in full. Say you owe $400,000, but you can sell your house for $300,000. If the lender allows you to sell and satisfy the loan, you've sold your house short.

If you're considering short selling your home, it's important to remember that a short sale will damage your credit score just as much as a foreclosure. They're both reported to the credit bureaus as a an account settled for less than the amount owed. Therefore, the short sale will drive your credit score down and remain on your credit report for seven years.

on Sun, 2008-10-26 17:00