Do you have a question about consumer credit? You may find an immediate answer by using the search engine. If you can't find what you're looking for, please fill out the form, being as specific as possible.
Please note: The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team will include it in a future column.
The information contained in this column if for educational purposes only and is not legal advice. You should consult your own attorney or seek specific advice from a legal professional regarding your particular situation.
Please understand that Experian policies change over time. Column responses reflect Experian policy at the time of writing. While maintained for your information, archived responses may not reflect current Experian policy.
Topics addressed on March 14, 2012:
“Compromise sale” of home will hurt credit
I am active duty military and anticipating a permanent change of station this year. I am considering doing a VA compromise sale on my home in Tucson, as it is underwater. I am current on the payments and am wondering how much a VA comp sale will hurt my credit?
The term “short sale” or “compromise sale” is used to describe an agreement between you and your lender to sell the house for less than is owed on the mortgage. Neither term appears in a credit report.
Instead, the mortgage account may be reported as “settled,” or “settled for less than full balance.” It will also show any history of missed payments. Even if you remain current leading up to the sale, any account not shown as” paid in full as originally agreed” is considered negative. A mortgage debt not paid in full can have a substantial negative impact on credit scores.
Time is the key for rehabilitating your credit history. If you determine that a short sale is the best option for you, make sure all of your other debt payments are always made on time, and reduce any debts you have as much as possible. Continue to use your credit cards, keeping your balances low and paying in full each month. The positive, current activity can help offset the negative history for your mortgage, and in time your credit history will recover.
Thanks for asking.
- The "Ask Experian" team