Last week I heard from several mortgage lenders that starting May 5th there would be a new way to report short sales to the credit bureaus. The new reporting would supposedly be neutral in your credit score, which would mean a short sale would not have any negative impact on your credit.

This sounded incorrect to me so I went to the Consumer Data Industry Association, the trade organization of the credit bureaus, for confirmation. According to Norm Magnuson, Vice President of Public Affairs, "Nothing has changed in the Metro 2 reporting of short sales."

What this means is short sales will still be reported as settlements, at least for the near term.

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.