Lots of lawyers, real estate agents, and loan officers love to give free advice about credit scores these days. Unfortunately, many of them have no clue what they're talking about.
A common piece of misguided advice often doled out to struggling homeowners is that choosing an alternative to foreclosure, such as a short sale or deed-in-lieu of foreclosure, will hurt your credit scores less. This just isn't the case.
In fact, all three scenarios are considered "not paid as agreed" accounts, so the FICO scoring model will look at them in the same manner. While that doesn't necessarily mean one option might not be better for you financially, it does mean that choosing one over the other will make no difference to your FICO credit scores. All three hurt, and you can count on them hurting big time.
