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Arizona Short Sale Credit Consequences

by Charlie Allred

Short sales can and will have an effect on your credit or FICO score. The question you have to ask yourself is to what extent and will it be more or less advantageous than a foreclosure.

The credit consequences of an Arizona short sale versus a foreclosure in Arizona vary to a degree. Most credit counselors will tell you that an Arizona short sale will show up on your credit report with a status of  “settlement” or perhaps  “settlement for less than owed” or or even “pre-foreclosure in redemption”… The names of the various statuses may vary but the net effect toward your score should be fairly consistent post short sale.

The problem you may run into is that lenders will not even consider your short sale until you are actually behind on your payments and showing delinquency or a difficulty paying. This, of course, will show up  on your credit report as “late payments” on your credit report.

The lates will count against you and while that is not positive, it’s possible to get them off of your credit report within a few years or so. In some cases a short sale can drop your credit score by as little as 80-100 points. And, if you have retained a quality Arizona short sale expert, there is also the possibility that you can enter a negotiation whereby you can avoid having the short sale reported to a credit reporting agency. That is not common, but it is possible in a short sale situation.

A foreclosure, on the other hand may take as many as 10 years to fall off your credit report and will most likely cost your credit rating or FICO score much more than a short sale: up to 250-280 points. A much bigger hit.

If you do find yourself in trouble financially, you will want to pursue a short sale and avoid foreclosure if possible. Look into Arizona short sale help today.

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