FICO: Short sale no better for your credit score than foreclosure
For borrowers going through the frustration of trying to market their home as a short sale, the big selling point generally is the thought that it's not as bad -- from a credit-score perspective -- as a foreclosure.
But that doesn't appear to be true, the folks at FICO say.
The credit-score company says on its analytics blog that it compared the effect of both types of distress sales on the scores of three different types of consumers. A foreclosure and a short sale represented an equal hit to the FICO score of all three, FICO said. (Thanks to HousingWire for noticing.)
One commenter on that blog takes issue with the suggestion that it's all the same, arguing that someone who needs a security clearance would be out of luck with a foreclosure in their past and thus has a reason to push for a short sale. But it's not clear that defense officials see a difference, either.
Sheldon I. Cohen, an attorney who focuses on security-clearance issues, writes that the Department of Defense's Office of Hearings and Appeals has granted clearances to some with a short sale in their background and some with a foreclosure in their past, and it's also denied clearances to people who had a foreclosure or a short sale. The key is "good faith and moral behavior," he writes: