There are several ways a foreclosure or short sale affects your credit score. If done correctly, a short sale can have less of an affect on your credit score than a foreclosure.
Here are several ways a foreclosure affects your credit score:
- The late payments that precede a foreclosure have a big impact on your credit score.
- FICO, the agency which calculates credit scores, guards their scoring system carefully, but it is estimated that a foreclosure can drop your score anywhere from 175 – 300 points.
- The foreclosure will remain on your credit report for ten years.
If possible, consider alternatives to a foreclosure, such as a short sale or deed-in-lieu of foreclosure.