How many points does a "charge-off" take off a credit score?
I am in the middle of selling my home, and am finding that I will be owing about 20,000 in the end. I can either pull out of the sale and stick with my home and hope to sell it for more at a later date, or the bank is offering a "short sale" program (apparantly something new). From what I understand they will "forgive" the deficit that I owe because they figure the alternative is foreclosure. However, they said they will report the situation as a charge off on my credit. I have not been able to find out how bad this will affect my credit. I am desperate to get out of my house but I have a credit score of over 700 and if that falls, I won't even be able to get into my next home, which defeats the whole purpose of selling in the first place. Anyone have experience w/ chargeoffs and how much (as accurate as possible) they will damage my credit?
Public Comments
- Unfortunately, that information is proprietary to Fair, Isaac, & Co. and they aren't talking.
- Do not do it, the chargeoffs (writeoffs) will destroy your credit. minimum 100 points and a major derogatory on the bureau which may hurt your chances for a new home at a later date. If the affordability of a current house is an issue and you have trouble making the mortage payments see if they can look into increasing your amortization, if your credit score is 700 you can increase amortization to 40 years this will reduce your monthly financial obligation until you can hold off for higher price on the house. Also look into skip a payment option if available.
- I would consult with an real estate attorney for this situation. your Realtor will refer you to one. charge off is a nasty mark on your credit plus you may be in jeopardy of this 20k being sold to a debt collector then in a few years you thought this was gone surprise you are getting hassled for this. THEN you may get a 1099 form for that 20k, then you have to apply this to taxes. So maybe try a personal loan could save you a big headache "try with you bank with the mortgage" I have seen folks with great credit and have there car repod "like a charge off" there credit went to low 500 very quickly.
