Big big big In a little-known policy shift, the three national credit bureaus — Equifax, Experian and TransUnion — plan to stop collecting and reporting substantial amounts of civil judgment and tax lien information on public records affecting millions of American consumers starting July 1.
Both types of information have negative impacts on credit scores and remain in credit files for extended periods. Tax liens are levied against properties when the owner is delinquent on payment of taxes. Civil judgments — debts owed by the losing party in legal disputes that typically involve monetary damages — are ordered by courts.
With the elimination of this information from vast numbers of consumer credit files, some lenders are concerned that when they order credit reports to evaluate an applicant, they may no longer get the full picture of the risk of nonpayment posed by the consumer.
...The three national credit bureaus have been tight-lipped about the details of their July 1 changes. Mortgage lenders say they have heard nothing from the three bureaus and are in the dark about the possible ramifications. Stevens told me that “nobody” in the mortgage industry “knows about this.”
In response to a request for this column, the bureaus’ national trade organization, the Consumer Data Industry Association, provided a statement indicating that the changes are part of the bureaus’ “National Consumer Assistance Plan” that follows a settlement in 2016 with 31 state attorneys general over alleged problems with credit reporting accuracy and correction of errors on credit reports.
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posted: Mar. 12, 2017 @ 12:45p
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posted: Mar. 12, 2017 @ 5:34p
1) From WSJ article today - "The three major credit-reporting firms...recently decided to remove tax-lien and civil-judgment data starting around July 1, according to the Consumer Data Industry Association, a trade group that represents them. The firms will do so if that data don’t include a complete list of a person’s name, address, as well as a social security number or date of birth. Many liens and most judgments don’t include all three or four. This change will apply to new tax lien and civil-judgment data that are added to credit reports as well as existing data on the reports."
In other words, not all judgments will be removed - only those lacking "complete" information, in that sense mentioned above.
2) For those of us who have credit records with no blemishes - we might face slightly greater competition when seeking loans.
3) Mid- to long-term, expect a somewhat higher default rate, because it's highly likely that many of these judgments were valid, but all of the data did not get captured. There is a strong correlation between people who have judgments, and their likelihood of defaulting in the future.
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