The importance of avoiding the 90 day late on your credit for San Diego real estate.
One of the smartest guys I know when it comes to credit is Derrick Evens, President and CEO of Perfect Credentials located right here in San Diego. Recently he presented some ideas regarding Short Sales over Foreclosures and 90 day late payments on your credit report. You can reach him at 877-260-1961.
Here is what Derrick had to say:
Many Homeowner’s are now considering their options in leaving behind their home for something less expensive in this difficult economic climate. Two of the main options include letting the Bank foreclose and doing a Short-Sale. From a Credit perspective, I can tell you that a foreclosure is the most difficult item to recover from.
However, it’s important to note what is really causing the scores to move lower. You see, it’s not the words “Foreclosure” or “Settled for Less” on your credit report that cause extreme damage to your credit score. It’s the late payments that lead up to the event itself that actually bring the scores lower and lower. This is especially true of 90-day late payments. Keep in mind, the Fico Score was designed to help Lenders predict the likelihood a Consumer will become 90 days late in the next two years. So, once you become 90-days late, the purpose of the scoring model is moot and it causes your credit scores to plummet!
So, what is the solution? Well, with foreclosure, there really isn’t one. However, long it takes the bank to do what they need to do is how many 90-day lates are going to rack-up on your credit report and drive your scores into the ground. I’ve seen as few as 6 and as many as 26! With a short-sale, you have some control over this. I have even seen short-sales completed without any late payments at all! When that happens, there is very little damage done to the credit score of the Homeowner. Of course, if you need to be late to get the Short-Sale approved, then just keep it from going 90-days late. Get to 60 and if it’s still not approved start making the payments again to avoid the 90-day late on your report. You can save your credit score with this move. Just last week I saw a report that had 4 mortgages all sold short in the last 11 months, but none of them went 90-days behind and our Client’s credit scores were 724 and 718. They hadn’t even lost 40 points from their peek a year earlier.
I would strongly suggest anyone in this situation speak to an Attorney or Financial advisor versed in these issues for your options. They will be able to advise you of your options after careful consideration of your individual circumstances.
If you are looking to improve your credit scores or want more information please check out the Perfect Credential website.
If you have specific questions for Derrick please post them here. We will look forward to more guest posts from him soon.
A REAL ESTATE BROKER IS THE PERSON QUALIFIED TO ADVISE ON REAL ESTATE TRANSACTIONS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL.
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