Understanding FICO® Scoring

[Aggieofcal]

I am in the Military and I bought a house 7 year ago, I havent been able to sell it and I am completing a short sale. How come my credit took a huge hit like over 200 points. Will my credit recover so hopefully I can get better credit. That is the only negative thing on my credit report and it feels like all the companies look at me like a loser since I cant sell my house and dont want to face a foreclosure.

[Cageym]

I can't say about the hit you took but was this a VA loan? And are you selling because of a transfer? I think there are VA programs to help you out with that. I'm retired AF but I never used my VA so I'm not sure. 

[llecs]

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Aggieofcal wrote:

I am in the Military and I bought a house 7 year ago, I havent been able to sell it and I am completing a short sale. How come my credit took a huge hit like over 200 points. Will my credit recover so hopefully I can get better credit. That is the only negative thing on my credit report and it feels like all the companies look at me like a loser since I cant sell my house and dont want to face a foreclosure.

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Is there anything negative reporting within the TL that would indicate a negative like a late or lates, or anything within the comments section of that TL?

Aside from the mortgage, is there anything else that changed on your credit reports like higher CC balances, other lates, collections, new accounts, etc.?

In order to compare apples to apples, make sure you are looking at the before and after using the same scoring system. Some people have made the mistake by looking at a FICO and comparing it to a FAKO (a non-FICO score). Doing so can easily produce a 200 point difference in some comparisons. Where did you get your before and after score from?

Finally, a short sale will ding your credit though it quite recoverable down the road. Just know that the housing demand is going up and with that so are the prices. Something to think about. Every short sale reason is different. YMMV as we say.

[cashnocredit]

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Aggieofcal wrote:

I am in the Military and I bought a house 7 year ago, I havent been able to sell it and I am completing a short sale. How come my credit took a huge hit like over 200 points. Will my credit recover so hopefully I can get better credit. That is the only negative thing on my credit report and it feels like all the companies look at me like a loser since I cant sell my house and dont want to face a foreclosure.

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Sadly, short sales are considered nearly as bad as a foreclosure as far as credit scores go.  This may seem pretty harsh but was recently looked at to see if it resulted in overstating consumer risk. Turns out it doesn't. Good chance you don't have the high risk that most short sellers do if you got someone to evaluate your personal circumstances and not just the numbers on a credit report but we really are all just numbers now.

From the horse's orifice:

"In the population we studied, one out of every two borrowers who experienced a short sale went on to default on another account within two years. That is exceptionally high risk."

http://bankinganalyticsblog.fico.com/2012/08/are-short-sales-really-that-bad.html

[AndySoCal]

A short sale is considered a settled account.  A settled account is considered a serious derogatory item in credit.