fico

Today I wanted to share with you some information about credit reports. I’m sure you might be concerned about the impact that a Philly short sale or foreclosure will have on your credit. The short answer is, nobody knows.

We have some information that might be helpful for you. The FICO scoring system uses many different types of criteria to determine your credit score. For example, your mortgage is only one thing they look at. They also look at your loan balance. For example, if you have a credit card with a $10,000 credit limit, they look to see if you have a $10,000 balance or a $5,000 balance, etc. They want to see if you can use credit responsibly.

We often advise our clients to pay down their credit cards as quickly as they can. If you can get the balance below 50% of the limit, we believe that it helps improve your credit score.

So, if you do a Philly short sale, the bank will ding your credit for having an account that has late payments. They will also ding your account for paying less than what is owed. However, your completed short sale will show as paid and not an open account. That will help your credit score.

All over the country we are seeing different information. Some places are allowing a new mortgage in 18-24 months. There are other places that take longer. If you’d like more information, please contact us today!