Credit Reports and Public Records
Credit Reports and Public Records
As a result of a settlement between the three national consumer credit reporting companies and 30 state attorneys general (National Consumer Assistance Plan or NCAP), the credit bureaus were required to increase the accuracy of credit report information related to civil public records. Effective July 1, 2017 all civil public records (bankruptcies, civil judgments, and tax liens) had to include name, address, and Social Security Number or date of birth before that public record could be included. And the settlement required that the information be refreshed every 90 days.
CFPB focused its most recent quarterly consumer trends report on this action. They used a nationally representative sample of approximately five million de-identified credit records from one of the three major credit reporting companies to analyze consumer trends. They then published a blog on February 22, 2018 reporting their conclusions. They noted that since July 2017:
- All civil judgments and about half of the tax liens were removed from consumer reports. The number of bankruptcies remained unchanged.
- Previously, 6% of consumers had a civil judgment or tax lien. After, public records were removed for about 80% of this group of consumers – only 1.4% had a tax lien and none had civil judgments.
- About 4% of consumers with June 2017 civil judgments or tax liens increased their credit scores enough to move into a higher credit score band (from subprime to near prime or from near prime to prime).
Their concluding statement indicates that removal of public records had minimal effect on overall scoring model predictiveness (either positive or negative). This is not unlike predictions from Bankrate.com who said in March 2017: “Tax liens and civil judgments are negative credit report items that can damage a consumer’s credit score. However, the new standards’ overall impact to consumers is expected to be minimal. FICO projects that 11 million of the 12 million consumers who will be affected by the policy change will see an average score increase lower than 20 points. Only about 700,000 consumers — roughly 0.35 percent of the scoreable population — will see their scores jump by 40 or more points.”
For additional information contact Evelyn at edehmey@fosaudit.com.
Credit Reports and Public Records | Evelyn I. Dehmey