FAIR ISAAC Damage Points – per FICO.com:
- “Maxxed out credit card” – 10 to 30 points
- 30 day late payment will cost you 60 points
- Bankruptcy hits your scores for 130 to 150 points
- Foreclosure will damage your score by 85 to 105 points
- Debt Settlement service (like a Consumer Counseling Service) will cut your score by 45 to 65 points.
Those are for an average score of 680. If you have a great score 780 then you get hit TWICE as bad!
Impact of Foreclosure on your Credit Score
There are three types of Foreclosure. You can do a Deed in Lieu, a Short Sale or a “straight up” Foreclosure.
Short Sale have less of an impact than Foreclosure, because the CDIA does not have a code for a short sale. In addition, IF the Realtor is able to negotiate with the Bank, the deficiency balance could be FORGIVEN. If this is the case, you will have late mortgage payments, but it will not show on your credit report as a “straight up” foreclosure.
If you go through a Foreclosure OR a Deed in Lieu, it will show on your credit report as an “8″ – which means Foreclosure. Again, this is about a 100 point hit, and you will likely be required to wait at least 3 years to purchase another home.
Loan Modifications for the first 90 days will lower your score. It’s reported as a partial payment. It’s only for a 3 month period. Supposedly the hit to the score is not as bad as foreclosure. Fair Isaac is looking to see if they need to make a change to modeling based upon modification.
A Car Repossession will also create a reduction in your score, and there are some important things to learn about them, especially if there’s a balance showing!
To purchase a home in 2012, you will likely need at LEAST 18 months of clean, on time payments, with NO Collections or Judgements filed against you. If you have Collections that total more than $999, then there’s a pending underwriting guideline change that could mean that those have to be paid in order to qualify.
In general, we need a score of 640 for a Government Loan Approval, although, in a few cases, NC Housing Finance Agency will grant loans to those with scores between 600 and 640.
If you are “Past the Storm” and you are now ready to purchase a home, please call Steve Thorne, Mortgage Banker in Cary , 919-649-5058.