How much impact does a short sale have on FICOŽ Scores? How about a foreclosure? I get these questions infrequently and thought I'd share some research that I came across. Contact me anytime if you or your clients have mortgage questions!
~Impact to FICOŽ Score
Starting FICOŽ Score -680 -720 -780
FICOŽ Score after these events:
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30 days late on mortgage 600-620 640-650 670-690
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90 days late on mortgage 600-620 610-630 650-670
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Short sale (no deficiency) 610-630 605-625 655-675
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Short sale (deficiency) 575-595 570-590 620-640
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Foreclosure 575-595 570-590 620-640
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Bankruptcy 530-550 525-545 540-560
Source: FICOŽ Banking Analytics Blog
~Estimated time for FICOŽ Score to fully recover
Starting FICOŽ Score - 680 -720 -780
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30 days late on mortgage - 9 months -2.5 years -3 years
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90 days late on mortgage -9 months -3 years -7 years
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Short sale (no deficiency) -3 years -7 years -7 years
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Short sale (deficiency) -3 years -7 years -7 years
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Foreclosure -3 years -7 years -7 years
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Bankruptcy - 5 years - 7-10 years - 7-10 years
Note: Estimates assume all else held constant over time (eg: no new account openings, no new delinquency, similar outstanding debt)
Source: FICOŽ Banking Analytics Blog
All in all, we saw:
The magnitude of FICOŽ Score impact is highly dependent on the starting score.
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There's no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.
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While a score may begin to improve sooner, it could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed.
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In general, the higher starting score, the longer it takes for the score to fully recover.
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Even if theres minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.
Call me with scenarios! I can help! 303-898-9000 or feel free to EMAIL me!
Thanks!
Steve J
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