How much better for your credit score is a short sale versus a foreclosure? On average, about 40 points.

FICO did an experiment, with three sample borrowers with starting credit scores of 680, 720, and 780.

In short:

• Missing mortgage payments REALLY hurts your credit score
• A deed-in-lieu of foreclosure doesn’t hurt you any more than a short sale (although many banks won’t consider accepting one until after you’ve tried to sell)
• The higher your starting score, the more dramatic the drop in score will be