Thought leadership on everything..Real Estate..
Carpe Diem..For the ongoing collection of Life!
Sotheby's International Realty
Monday, April 30, 2012
FALLOUT FROM A POOR CREDIT SCORE...
Carpe Diem...Real Estate Update
FALLOUT FROM A POOR CREDIT SCORE
IF you want to see how quickly you can ruin a great credit score, just skip a mortgage payment.
In a study last month, FICO looked at how choices would affect three
hypothetical mortgage holders: One with a spotless 780 score; another
with a good 720, who may have missed a couple of credit card payments
three years ago; a third with a not-great, not-toxic 680, who has
sometimes fallen seriously behind on credit cards or a car loan. (Most
lenders consider poor credit about 650 and below)
30 days late: The gold-plated 780 drops to 670-690, the middling
720 becomes 630-650, and 680 is now 600-620. Effects are most
significant for the strongest borrower. “A continued progression is
going to have less and less impact on a score,” Ms. Gaskin said.
90 days late: This is seriously delinquent, and brings the
onetime best borrower down to 650-670, the midlevel one to 610-630, and
the weakest to 600-620.
Short sale, deed in lieu of foreclosure, or settlement, assuming
the balance has been wiped out: The result is just a bit less serious.
The 780 score deteriorates to 655-675; 720 to 605-625; 680 to 610-630.
Foreclosure, or short sale with a deficiency balance owed: For either, 780 is 620-640; 720 is 570-590; and 680 is 575-595.
At a certain point it might seem as if there was not much difference
between bad and worse, but remember that the lower the score, the longer
it takes to climb back.