How foreclosure impacts your credit score

How foreclosure impacts your credit score By Les Christie, staff writer    April 22, 2010: 4:44 PM ET NEW YORK (CNNMoney.com) -- If you're delinquent on your mortgage, your credit score will suffer. Everyone knows that. The question is, by how much? Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores. Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems. Here are the average hit your credit will take: 30 days late: 40 - 110 points 90 days late: 70 - 135 points Foreclosure, short sale or deed-in-lieu: 85 - 160 Bankruptcy: 130 - 240 To come to these figures, Fair Isaac created two hypothetical consumers, one who starts out with a fair-to-middling score of 680 and the other with a very good one of 780. (FICO scores range from 300 to 850.) The hypothetical person with the 780 FICO has 10 credit accounts versus six for the 580, plus a longer credit history, lower utilization of total credit limit and no missed payments on any account. The other consumer has two slightly damaged accounts. Neither have any accounts in collection or adverse public records. See the chart above to see how each scenario affected each borrower. Notice that for both borrowers a single one-time black mark results in steep drops, but it is when they fall further behind that things get really harsh, according to Craig Watts, a spokesman for Fair Isaac. "The lending industry tends to regard an account differently when it has become 90 or more days late," he said, "The likelihood that consumers will resume paying their overdue obligations drops off significantly after the delinquencies have reached 90 days." One reason credit companies were so closed-mouthed is that they often can't definitively state how much each delinquencies will affect scores because there are too many variables. Some borrowers will fall much more steeply than others for the same payment problem, according to Maxine Sweet, vice president for public education at Experian, one of the nation's main credit bureaus. "If you picture someone who has just one mortgage and one other credit account versus a mature credit user like me with 15 accounts, if they miss one payment that would impact their scores a lot more," she said. "For me, one missed payment would just be a blip." The point loss also depends on the borrower's starting point: People with very high credit scores have more to lose than low-score borrowers; the impact of a single blemish on an 800 score is more than on a 500. Of course, it just gets worse when you face foreclosure. Mortgage borrowers can lose their homes three basic ways: a foreclosure; a short sale, where the home is sold for less than than is owed and the bank (generally) forgives the difference; or a deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance. Sweet said credit bureaus generally slash scores equally for those three resolutions to someone losing their home. The important factor, she said, is that "it's reported that you paid less on a settled account." Some borrowers may think that because they never missed a payment, they can "walk away" from their homes with relatively little impact on scores. Not true. "When a deed-in-lieu or short sale is reported as a partial payment, it's treated as a serious delinquency," Watts said, "just like a foreclosure." Even if borrowers made payments faithfully for years before short selling or doing a deed-in-lieu, their credit score will still take a hit. The total decline will run about 85 points for the 680 score borrower to as much as 160 for the 780 score. Mortgage debt, combined with other financial problems, can send borrowers into bankruptcy, the worst thing that can happen to your credit score. The effects are long-lasting, according to Sweet. In a Chapter 13 bankruptcy, which involves partial repayment over several years, the stain will take seven years to remove. A Chapter 7 bankruptcy, which involves liquidation, takes 10 years to get over. It's gonna cost you Absorbing a big credit-score hit can make many transactions more costly. It's not just paying more for credit card debt and auto loans, insurance can cost more as well. The average savings for someone with a good versus mediocre credit score is about $115 a year for auto insurance and $60 for home, according to Loretta Sorters, of the Insurance Information Institute. A low credit score can even make it harder to rent a home because landlords often use credit scores to weed out prospective renters. Despite the problems a poor credit score can cause, Experian's Sweet recommends that people who are in financial dead ends, like totally unaffordable mortgages, it's better to recognize that and cut your losses quickly; don't prolong the problem. "You need to do what you need to do to get your finances back in order," she said. "Don't worry about your credit score."

Childproofing Your Home

Childproofing Your Home When it comes to decorating your home, there's a lot more to consider than simply coordinating your window treatments with your carpet. This is especially true if you have children in the home, which presents a whole new concern for keeping them safe and sound. Take A Look Around When you take a quick glance throughout your home, what do you see? Is the home decorated for an adult or a child? If your little one is like most, he/she has a lot of energy and isn't afraid to use it. To prevent a hard spill, many families replace hardwood or tile flooring with plush carpet or rugs for a little extra padding. If your child stumbles and falls, the extra cushioning will come in handy. Do you have any furniture with glass inserts or sharp corners, or do you see a lot of breakables throughout the home? If so, it's time to remove them. You should get rid of any furniture that could be hazardous to your youngster and this includes glass top tables and anything with protruding edges. Lots Of Locks When you have children in the home, it's important that you keep all cleaning products locked away in a cabinet and/or out of reach of your little ones. If possible, consider adding an alarm that will alert you if the cabinet is opened. Most families have a medicine cabinet, which contains either over-the-counter or prescription medication. This area is a serious concern for children and should be locked and out of their reach. It's also important that all medications feature a childproof lid for added protection. If there is an area of your home or a specific room that your child is not permitted in, place a child gate in the doorway to prevent them from sneaking in while you're not looking. Children are fast, but this is one way to make sure that they are also safe. Do Not Touch Children are curious by nature, but there are some common household items that they simply must refrain from touching. These include a fan, paper shredder, space heater, scissors and other sharp objects that could pose a serious risk for your little one. Make sure that these items, along with anything similar, are kept out of reach. All electrical appliances, including hairdryers, styling products and appliances must be stored away from water and out of your child's reach to prevent injury. Speaking of which, all electrical outlets should be covered with outlet covers and any small items, including marbles and coins, must be picked up and kept out of your child's reach. Because children love to see what they can fit into their mouths, it's important that they not be left alone near these items. Safety At Play When your child is outside, make sure that the environment is a safe one. This means that your yard should be completely fenced with a locked gate to prevent him/her from wandering out into the street. It's always a good idea to keep an eye on your child, but it's even better to make sure that he/she is safe if you happen to glance away for a second.

Don't foreclose! Do a short sale

Don't foreclose! Do a short sale on your Paradise home Short sales are the hottest thing going in the distressed-property market, and the trend is expected to get even hotter in coming weeks, when the government starts handing out cash to encourage lenders to close these deals. Banks have ramped up short sale approvals.  These transactions, where lenders allow homeowners to sell their houses for less than they owe, accounted for 17% of all residential real estate sales in February, up from nearly 13% in November, according to a monthly real estate market survey by Campbell/Inside Mortgage Finance. And Bank of America (BAC, Fortune 500), the country's largest mortgage servicer, has more than doubled the number of short sales it processed in recent months. Contact me to Short Sale your home!  530-413-8383

May 19 - Willy Wonka, Jr. – playing in Chico CA

Willy Wonka, Jr.

Wednesday, May 19 7:30p

at California State University - Chico: Laxson Auditorium, Chico, CA

The young performers of The Playhouse bring to life the timeless story of the world famous candy man and his quest to find an heir in this stage adaptation of Charlie and The Chocolate Factory. In this performance by kids for kids, you'll hear "The Candy Man," "Pure Imagination," "Oompa Loompa," and "I Want it Now. read more

Price: $12 Adult $10 Senior $8 Student/Child

Phone: (530) 898-6333

The young performers of The Playhouse bring to life the timeless story of the world famous candy man and his quest to find an heir in this stage adaptation of Charlie and The Chocolate Factory. In this performance by kids for kids, you'll hear "The Candy Man," "Pure Imagination," "Oompa Loompa," and "I Want it Now." Sure to be a hit with the whole family!
If you enjoy Willy Wonka, Jr. you may also enjoy: Alice in Wonderland, Jr. | Igudesman & Joo: A Little Nightmare Music | Yamato Taiko | The Hobbit | Sleeping Beauty | Peking Acrobats | The Edlos: A Cappella Broadway | A Year With Frog and Toad | The Handsome Little Devils - Squirm Burpee Circus | Comedy Pet Theater | Moscow Circus

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