This is a very interesting statement from the creators of the FICO score. It does seem to contradict most everything you read from Realtors.
Two Alternatives to Foreclosure - WSJ.com
Two Alternatives to Foreclosure - WSJ.com
A Blow to Credit Scores
What short sales and deeds in lieu of foreclosure don't do is minimize the impact on a borrower's credit score. All three proceedings have roughly the same negative impact on an individual's credit score, says Craig Watts, spokesman for Fair Isaac Corp., which created the widely used FICO score.
Mr. Watts says that to date little analysis has been done distinguishing, for instance, the credit risk of individuals who completed a short sale versus those involved in a foreclosure. For that reason, "the model ends up treating them [a short sale, a deed in lieu of foreclosure, and a foreclosure] all the same."
