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Foreclosure

 Credit score drop up to 160 points

 

 

foreclosure and a short sale have similar negative hits on your credit score. A foreclosure is generally worse because you are not working with your bank whom you owe money to settle your debts. A short sale, on the other hand is debt forgiveness. Your bank agrees to forgive the difference between the sale and what you owe. Just be aware you will probably have to pay taxes on your deficiency.

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A foreclosure or short sale will hurt your credit score for seven years and potentially ruin your future as well. If you have already foreclosed then stop the your credit score from dropping by making sure all other bills are paid on time. 

 

Carefully weigh the pros and cons of doing a foreclosure before proceeding. If you have two people on the deed, know that both owner’s credit scores will be negatively affected. If you are already 30 days late or more on your payments, check your credit score and call the bank to see if you can work something out.