How a Foreclosure or Bankrupty Impacts Your Credit Score

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Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.

Here are the average hit your credit will take:

  • 30 days late: 40 – 110 points
  • 90 days late: 70 – 135 points
  • Foreclosure, short sale or deed-in-lieu: 85 – 160
  • Bankruptcy: 130 – 240

“The lending industry tends to regard an account differently when it has become 90 or more days late,” said Craig Watts, a spokesman for Fair Isaac. “The likelihood that consumers will resume paying their overdue obligations drops off significantly after the delinquencies have reached 90 days.”

One reason credit companies were so closed-mouthed is that they often can’t definitively state how much each delinquencies will affect scores because there are too many variables.

Some borrowers will fall much more steeply than others for the same payment problem, according to Maxine Sweet, vice president for public education at Experian, one of the nation’s main credit bureaus.

“If you picture someone who has just one mortgage and one other credit account versus a mature credit user like me with 15 accounts, if they miss one payment that would impact their scores a lot more,” she said. “For me, one missed payment would just be a blip.”

Source: Les Christie, CNNMoney.com



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