Timeshare Foreclosure and Your Credit Report
If you find yourself unable to pay for a timeshare you financed, you might wonder if it is best just to let the timeshare get foreclosed on. But if you have question about just how timeshare foreclosure impacts your credit report, the answers aren’t too great.
Most timeshares are deeded real estate, just like the home you own. Even many points programs such as Wyndham, RCI or Disney Vacation Club, have a property underlying the points. In fact, if you finance a timeshare purchase you are essentially taking out a mortgage and can declare your interest payments on your tax return.
Since timeshares are property, going through a timeshare foreclosure is going to hurt your credit report. While some potential creditors in the future may take a look at your complete credit history and decide that a timeshare foreclosure isn’t as harmful as regular mortgage default, it will still remain on your credit report for at least seven years. And you can expect that many of the companies and banks who will pull your credit report in the future will consider such a foreclosure to be quite negative.
While the entry will remain on your credit report for seven years, usually the first three years carry the worst consequences, i.e. making it tough to get credit cards or a mortgage or other loans. So you probably want to think about what your future plans are before you decide to either just let the timeshare go or start looking for some timeshare relief.
For example, if you already own your own home and don’t expect you’ll need any additional credit within the next three years, then the direct impact on your lifestyle may be fairly insignificant. You may however want to think about the likelihood of a career change though as many companies nowadays pull credit reports before making a final decision on hiring. In fact, even something as simple as getting a new cellphone could become difficult as cellphone companies pull your credit report too.
Of course, if you are deciding between making your timeshare payment and paying your home mortgage, I don’t think there’s any contest. Your home is more important that the timeshare. In the long run, you’ll need to make your own decision on how badly a negative entry on your credit report will impact your life, but if it down to one or the other, I’d pay my home mortgage and take my chances on the timeshare.
