The North Fulton Blog

As we all know by now, many aspects of our everyday life are controlled by our credit score, both good and bad.  If we have great credit, we can buy virtually anything at the very best rates (provided we have the money to pay for the purchase).  If our credit is not so good, we will have to settle for paying a higher price for many purchases, including homes and cars.  Let me say right here that many homeowners from all walks of life and in all price ranges and in all levels of credit that are being affected by foreclosures and short sales.  It's not just those that have not so great credit!

With the current flood of distressed properties going into default and foreclosure it makes sense to look at the affect these activities might have on someone's credit score. In a recent article posted on ActiveRain, mortgage banker Gene Mundt from Joliet, IL makes the point that everyone going through a foreclosure or short sale is going to take a hit on their credit score, but how big the hit will be is the real question. "Using the guidance given him by FICO, he listed the following impacts for differing levels of delinquencies:

30 days late:  40-100 point drop

90 days late:  70-135 point drop

Foreclosures, short sales, deeds in lieu:  85 to 160 point drop

Bankruptcy:  130 to 240 point drop

As the delinquent payments become more serious, the point drop in score becomes more dramatic."

As is pointed out in his article, Mundt says a borrower needs to get help from their lender early on when they realize that they are facing a financial problem.  A homeowner should "forego the embarrassment and get help.  If the problem has moved beyond that point, they then need to assess their financial damages and forget their credit scores.  They cannot afford to let the scores rule them and keep them from doing whatever they must for themselves and their families."  

The point to be made from this article is that a homeowner in financial trouble facing foreclosure cannot allow himself to become paralyzed.  He must take action to protect himself and his family.  That action can take many forms, but some action is necessary.  70% of all homeowners facing foreclosure take no action at all!  That is an incredible fact.  Don't let yourself be embarrassed into taking no action.