Q&A: What is the impact of multiple foreclosures on your credit?

Question by : What is the impact of multiple foreclosures on your credit?
I have 3 properties and 4 mortgages. All three are “upside down” and one has no hope of a successful short sale and will go to foreclosure. I’ve listed the other 2 for short sale and even have an offer on one.

Due to major changes in our financial situation (wife lost job, one renter lost job, etc.) I am behind on all three. I’m thinking of just letting them all go to foreclosure. I know that one foreclosure hits your credit score by -200 points. Short sales and “Dead in Lieu of Foreclosure” also have a negative impact but not quite as much.

My question is, will each foreclosure or negative action impact my credit score “cumulatively?” That is, with one foreclosure droping my score from 725 to 525, the next 2 foreclosures can’t drop my score from 525 to 325 and then to 325 to 125 since the lowest score possible is 300.

It seems to me that if I have one or three foreclosures, it doesn’t really matter.
By the way, we weren’t speculating on the real estate market. We’ve been working for years to buy these properties and have lost$ 100’s of thousands in equity in the last 18 months.

The real estate market in Nevada has dropped at least 50%. This has also cause rent prices to drop so even if we could rerent 2 of our properties, we wouldn’t be covering our costs.

Best answer:

Answer by Ryan M
They will each affect your score INDIVIDUALLY, just like defaulting on 3 credit cards. You are right that your score will not go down to 125, but it will be darn close to 300. You have to remember that there is no “set” amount of points that each foreclosure will have on you. The first one might be 150 points, the next one is 75, and the third is 50. These are calculated on a formula, not based on standard point penalties.

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