Published On: July 13, 2017
New policy governing credit reporting criteria.
Starting July 1, 2017, the three nationwide consumer reporting agencies, Equifax, Experian and TransUnion, are starting a new policy that will raise about 12 million consumers’ credit scores as much as 10 points. This could mean the difference in qualifying for a better interest rate when financing a vehicle or other cost savings benefits.
The companies are instituting this new policy following a settlement with lawmakers in more than 30 states. Attorneys general alleged liens and civil judgments were often attached to the wrong people, unfairly hurting their ability to access credit for a home, car or gym membership.
Lien or judgment does not match criteria will no longer appear on a credit report
After July 1st if a lien or judgment does not match three of the four criteria of name, address, social security number or birthdate, it will no longer appear on a credit report. Many courts have specific requirements before a creditor can record a judgment (many requirements are ignored more than honored). This new policy may bring a focus on the court requirements as related to recorded liens/judgments.
See also: Here’s one thing consumers still don’t understand about their credit scores
Increases in a consumer’s credit score can move them into a more desirable credit category which could mean qualifying for more cards and other forms of credit with lower interest rates.
- Tax liens and civil judgments will remain on credit reports as long as the citation includes the person’s name, address and either the date of birth or the Social Security number. It is anticipated that 40%-50% of tax liens will remain on credit reports.
- Because civil judgments do not generally adhere to these enhanced standards, they will be removed from consumer reports. It is estimated that only about 4% of civil judgments might remain on reports.
- Medical debt that is less than six months old will not be reported beginning Sept. 1.
The Consumer Financial Protection Bureau tracks consumers’ complaints, and one of the most frequent is about incorrect information on credit reports.
The bottom line – don’t take on credit unless you can pay the debt (easy to say, but hard to do). As a bankruptcy attorney I see the optimistic use of credit the start of a slow downhill slide into financial distress. “Learn to use credit, rather than credit using you”. Some of my lessons are due to personal challenges. Diane L. Drain
About the Author: Diane Drain
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.
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I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.
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Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.
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