Keeping an eye out for your future.
It may be hard to think about the future, when you are struggling with your debts right now. But things will get better. So one of the aims right now is to minimize the hit to your credit score by avoiding foreclosure. That way, you will have more and better options for obtaining financing in the future.
Foreclosure has a severe and long-lasting impact on your credit score.
A foreclosure may cause your credit score to drop by as much as 200 to 300 points. And that foreclosure normally will remain on your credit report for five to seven years, making it difficult or impossible to qualify for financing.
The impact of a short sale is smaller, and short-lived.
Short sales are reported differently from foreclosures by credit agencies. The “hit” from a short sale is smaller - often as little as 60 points. And you may qualify for new financing in as little as 12 months after re-establishing your “satisfactory credit” standing.