I have searched several sites, blogs, etc. for a concise answer to the question on the effect of a short sale on one's credit score.
It was mind-boggling to find so many different answers. And I am just as befuddled. For sure the credit score has to be negatively impacted since banks will surely report late payments. To approve short sales, a homeowner must prove hardship, and most if not all lenders will look at missed/late payments.
But I've seen so many postings that say to save one's credit, one should opt for short sale instead of going to foreclosure.
Granted that short sales show effort on the homeowner's part to sell the property before it is foreclosed and thus lessen the Lender's costs, nonetheless a short sale still is indicative of the homeowner's failure to meet financial obligations, i.e. pay his mortgage on time (if at all!).
One popular website (About.com/ on homebuying and selling) says that the impact of a short sale is identical to that of a foreclosure or deed in lieu of foreclosure --- about 200-300 points drop in credit score. While others say it would not be as severe.
So who's right? And what IS the scoring impact? And who is this trusted resource?