Posted on: 20th Jul, 2010 06:37 pm
We just completed a short sale and were able to get the 2nd mortgage to release the lien, but not the deficiency balance. They reported it today as "bad debt, sent to collections." This resulted in a 67 point hit to our credit score. We intend to try to reach a partial settlement with the bank in order to get this resolved. Once that happens, it sounds like they will update the reporting to "settled charged off." How will that new reporting impact our score? Will it help or hurt? I called FICO and someone said that it could actually hurt our credit score as it would be viewed as new negative reporting, despite the fact that we settled. Thoughts?
Hi Guest,
After you settle the account, I don't think it will have a negative affect on your credit report. Rather, it would have a positive impact on your credit report. When you apply for a loan next time, the lender will consider a "settled charge off" as a positive thing compared to "sent to collections" status on your credit report.
Thanks
After you settle the account, I don't think it will have a negative affect on your credit report. Rather, it would have a positive impact on your credit report. When you apply for a loan next time, the lender will consider a "settled charge off" as a positive thing compared to "sent to collections" status on your credit report.
Thanks