Your credit union is wrong. I am not sure how we go about proving that to them, but I would go to the top if I had to to correct this injustice. If a short sale were the same as a foreclosure NOBODY would short sell their homes, it's just too much trouble doing all the paper work and so on, everybody would just walk away and let the banks foreclose, which would be a disaster for the credit worthiness of former homeowners as well as for the banking industry and would cause extreme neighborhood blight.
How long has it been since the short sale, that may be the problem. What kind of loan are you trying to get? If it's a mortgage, go straight to a mortgage professional, get their opinion, then approach your credit union again. If some other kind of loan, again, perhaps you need to go to somewhere other than your credit union. That's a shame, but it would be worth it to re-establish credit.