Can A Timeshare Hurt My Credit Score?

According to FICO, a foreclosure could lower a person’s credit by 100 points or more. And even if the developer doesn’t report your foreclosure to a credit bureau, it will still become a public record. Rebuilding your credit can seem like forever. Luckily for you, our team has composed some helpful tips to guide you if your credit score is affected by a timeshare.

Timeshares were once considered a great investment but they are becoming a burden day by day. As yearly maintenance fees have increased every year, timeshares are turning into a nightmare for many owners. Even though timeshares do not impact your credit directly, there are several situations in which timeshares can have a bad effect on your credit.

If you buy a timeshare on a loan and you have missed a few of your timely payments or you are late in paying them due to any reason, the developer of the timeshare can report you to credit bureaus. As timeshares are a long-term investment, your financial situation may vary in the future which can result in late payments and then the report will hurt your credit score.

In case you keep missing your timeshare payments and not paying your bills, your timeshare will go into default. If your timeshare is defaulted, the developer’s last option would be to go for foreclosure. If your timeshare falls into foreclosure, it will badly affect your credit score and it might affect it for over ten years.

If you have bought a timeshare on loan and it adds up to your overall load of debt, your debt-to-income ratio will eventually increase. Banks or lenders consider this ratio before giving you any kind of loan like car loans etc and if the ratio is high you will face difficulties in getting any other kind of loan.

If you decide to cancel your timeshare after the rescission period, which is about 3 to 10 days where you can cancel your timeshare without a penalty, you will have to include a third party like an attorney to understand and guide you through the procedure or a resale company to provide a platform to advertise your timeshare, you will have to pay them. This will also lead to damage to your credit.

There have been cases of scams regarding timeshare reselling and renting as well. Owners of timeshare have been recently scammed by people which often results in financial losses. These financial issues can also lead to late or missed payments and this will badly influence your credit.

With time, legal issues may occur with your timeshare, this will result in you paying several kinds of legal fees which will most definitely have a bad influence on your credit score.

These are a few of the many bad effects a timeshare can have on your credit score. This leads to the conclusion that a timeshare is more of a liability than a profitable investment or a future asset that can be passed on to future generations.

There are a few ways to protect your credit score from the bad effects of your timeshare. The first and foremost thing is to research before buying a timeshare. You should know everything about the thing you are about to invest your precious money in.

After being clear about what timeshares are, if you still want to buy a timeshare, you should research the developers, in-demand locations, and all the other factors like the legal procedures, the terms, and conditions, etc. Make sure to consider your long-term financial situation so you do not miss any payments or even be late in paying them to avoid bad effects on your credit.

When signing the contract, make sure to read the policies, terms, and conditions very carefully, especially the ones that are related to any kind of payments, fees or bills, etc, as well as the exit options.

If you are having financial problems and having difficulty paying the mortgage or maintenance fees after buying your timeshare, you should immediately contact your developer so they can help you by coming up with any possible solutions to these issues. If you are thinking about selling your timeshare or even renting it out, make sure that the third party you are consulting is legit and not a scammer so that you do not lose any money or any kind of other asset.

In conclusion, being cautious, and keeping your research thorough, and well-informed about your financial stability can save you from losing your credit score if you have invested or are about to invest in a timeshare.