How Does a Naperville Short Sale Affect the Seller’s Credit Score?

How Does a Naperville Short Sale Affect the Seller’s Credit

Score?

How Does a Naperville Short Sale Affect the Seller’s Credit Score?

How much impact does a Naperville short sale have on

a seller’s credit score?


When you pay less than what is due on any debt, it stands to reason that your credit score will take a hit, especially when it comes to a mortgage. Both, a short sale and a foreclosure will negatively impact your credit score.

The term ‘short sale’ doesn’t actually appear on your credit report. It will, instead, appear as a mortgage that was ‘settled’ for less than the full balance. Settled accounts, especially when it comes to a mortgage, are very negative.


Any delinquent payments leading up to a short sale will remain on your credit report for seven years from the original date you let your mortgage go delinquent. If you were consistently on time with your payments, the mortgage will remain on your credit report for 7 years from the date it was reported or paid.

I strongly recommend that you find out and understand exactly how your lender will report your short sale, foreclosure or deed in lieu of foreclosure to the credit reporting agencies and if they will sell the remaining debt to a collection reporting agency.


The impact on your credit score will depend on how your mortgage was closed and reported on your credit history, and your FICO score prior to the short sale (or the starting score). The higher the starting score, the longer it will take for it to fully recover.

Let’s say you have a good starting credit score of 780, it will take your FICO score around 7 years to fully recover. This is true for both short sales and foreclosures. However, if the starting FICO score was lower, the short sale seller’s score can fully recover in a shorter period of time.


Distressed homeowners with a FICO score around 680 can recover their scores in around 3 years, which is less than half of the amount of waiting time than those who had higher FICO scores prior to the Naperville short sale.

The number of days you were late on your mortgage, or what we call mortgage delinquency, also greatly affects your credit score, dropping by 50-250 points.


Here is a table showing the impact of mortgage delinquency on the credit score. The second table shows the time it takes to fully recover based on the starting FICO score:


If these figures alarm you or make you feel hopeless, don’t be! There is still hope of rebuilding your credit after a Naperville

short sale.


Here are some things you can do to rebuild your credit


Pay all your bills in full and on time. – This includes your credit card bills, utility bills, monthly phone and internet charges, etc. Although they are not required to do so, you can request these companies you make your payments to report to the credit bureaus that you have made your payments in full and on time. They will do it if asked. Credit bureaus give more weight to credit card payments than utility payments but if you are working on rebuilding your credit, nothing is too small or too big. Every single payment you make in full and on time counts.


Don’t close your existing credit card accounts. – Keep your credit cards open as this will lower your debt to credit ratio and improve your credit score as you pay off your balances. Avoid opening a new credit line.

Try applying for a secured credit card. – If your credit card accounts have closed after a Naperville short sale, you can try applying for a secured credit card. This is a good way to rebuild your credit score as well as control your spending since the amount of money you deposit acts as a self-imposed credit limit as well as collateral.


Although a Naperville short sale can greatly affect your credit score, you still have a chance at rebuilding your credit. Use the waiting period wisely, whether 7 years or less, as a time to do these things that will help you improve and rebuild your credit score and save for a new home so you can get another chance at homeownership after a Naperville short sale.

Can a Seller Rent Back Their Home After a Naperville IL Short Sale?

If you are ready to do a Naperville short sale, call me, Teresa Ryan at 630-276-7575. As Broker/Owner

of Ryan Hill Realty – www.RyanHillRealty.com, I have the experience and tools to help you sell your

Naperville short sale home.

How Does a Naperville Short Sale Affect the Seller’s Credit Score?

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