April 26, 2011

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:

Continue reading "FICO: Short sale no better for your credit score than foreclosure" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Credit score, Distress sales, The foreclosure mess

December 15, 2009

Keeping your credit score healthy post-holidays

If you've made homebuying a New Year's resolution, you'll want to keep your credit score from slipping over the holidays. FICO, the credit-score company formerly known as Fair Isaac Corp., is offering a few pieces of advice so you don't end up with a nasty shock when you apply for a mortgage in a month or two.

You know those retailer come-ons promising 25 percent off your purchase if you open a store credit card? Skip them, FICO says. That's because "opening new lines of credit can hurt your credit score, and may increase your chances of paying your bill late, which can have a very negative impact your credit rating," the company notes.

While you're at it, don't run up big gift-purchase balances on the cards you do have. "Although experts agree having 3-5 credit cards helps your credit, carrying a balance leaves you with a much lower credit score, which could jeopardize your chance of getting lines of credit elsewhere," FICO says.

And it might seem like a no-brainer, but don't delay when the holiday tab comes due. "A single late payment of just 30 days can bring a credit score of 780 down 90-110 points, and a score of 680 down 60-80 points," FICO says.

The average score in Maryland is 688, a few points above the national average. (Highest? South Dakota at 710.)

Want to know more? Back in my How-to Monday days, I wrote a primer on credit scores and a how-to on improving those scores.

So are you watching your credit score? What are you doing to improve it?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (3)
Categories: Credit score
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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