Written By The Simply Homes Team | July 31, 2023 | 3 minute read
As you can see, payment history and credit utilization account for 65% of your credit score, and are effectively the two items you have more control over when you sell your property to avoid foreclosure.
Regarding payment history, the sooner you recognize that you won't be able to keep up with your mortgage and sell your property, the less impact late payments will have on your credit score. The closer you are to foreclosure, the more missed payments will be on your credit score. Avoiding missed payments must be your top priority.
Another thing to take into account when selling is reducing your deficiency balance as much as possible. The deficiency balance is the difference between the amount you owe on your mortgage and the amount you sell your property for, which your lender can report to the credit bureaus as a debt, negatively impacting your credit score. However, if you negotiate a short sale or deficiency waiver with your lender, they may agree to forgive the deficiency balance, minimizing the damage to your credit score.
On the other hand, Credit Utilization is based on how much credit you're using compared to your total available credit. When you sell your property, you'll pay off your mortgage, which will reduce your available credit. If you have other credit accounts, such as credit cards, these debts will represent a larger proportion of your available credit, increasing your credit utilization. However, if you pay off your other credit accounts before you sell your property, you can minimize the impact on your credit utilization.
If you are in a foreclosure situation, the other aspects of how your credit score is built - Credit Mix, Credit Length and New Credit accounts- are somewhat outside of your direct influence, and their overall impact on your credit score is not that significant.
To avoid the harshest consequences to your credit score of selling your house to avoid foreclosure, you need two do two things: sell fast and sell for the best price possible. Simply Homes is the way to go.
At Simply Homes, we want to understand what is behind every home sale and strive to use all our technology to give you the best cash offer possible for your home "As-Is" in as little as 30 seconds.
Put yourself in the best position to be a homeowner once again. Avoid missing payments and foreclosure. Sell to Simply.
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