Credit Reports to Exclude Certain Negative Information, Boosting FICO Credit Scores
As a result of increasing pressure from Consumer Financial Protection Bureau and other regulatory concerns, the three major credit-reporting agencies are changing their standards for two pieces of negative information: tax liens and civil judgments. The promise is that sometime around summer of 2017 Equifax, Experian, and TransUnion will remove those data points from reports if they don’t include a person’s name, address, and either a Social Security number or date of birth. “Many liens and most judgments don’t include all three or four.”
It is expected that about 12 million people will see a slight increase to their credit score, typically of less than 20 points, but 700,000 people will get a rise of at least 40 points. “In many cases, that can mean the difference between getting approved for credit or denied it.”
LexisNexis estimated that 96% of public-record information about tax liens and 50% of information about civil judgments cannot be verified. LexisNexis Risk Solutions pulls tax lien and civil judgment information from the courts and the U.S. Internal Revenue Service and feeds it to the three credit bureaus. It also provides the same type of data directly to lenders.
“The three main credit-reporting firms jointly decided to make the changes. They did so as regulatory pressure has intensified in recent years around credit reports and the outsize role they typically play in lending decisions.”