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Credit Bureaus Announce Changes to Credit Reports

Commercial Mortgage
Posted on 
March 23, 2017

The decision to remove many tax liens and civil judgments from people’s credit reports could boost scores for millions of U.S. consumers, according to a report by the Wall Street Journal.

According to the article, the three major credit-reporting firms – Equifax, Inc., Experian PLC and TransUnion – will be removing some of the above negative information from credit reports partially in response to regulatory concerns.

While this could mean the difference between qualifying for a loan and going without for some consumers, it could also pose a risk to lenders. Credit reports and scores are a major factor in determining how much consumers can borrow and to gauge their willingness to pay their debts.

The firms will begin to remove civil judgment and tax-lien information beginning around July 1, according to the Consumer Data Industry Association, a trade group which represents them. The data will be removed if they don’t include a complete list of at least three data points: a person’s name, address and either a social security number of date of birth.

According to the report, many liens and judgments do not include all of the information listed above. The change will apply to both new and existing data.

While inaccurate information on credit reports can keep consumers from obtaining financing or credit, that data can be crucial for lenders. According to LexisNexis Risk Solutions, consumers with liens or judgments on their credit reports are twice as likely to default on their loan payments.

“It’s going to make someone with poor credit look better than they should,” said John Ulzheimer, a credit specialist and former manager at Experian and credit-score creator at FICO. “Just because the lien or judgment information has been removed and someone’s score has improved doesn’t mean they’ll magically become a better credit risk.”

While lenders will still be able to check public records to access this information, it’s important for brokers to be mindful of the coming changes when submitting future deals and to choose lenders who understand that your borrowers are more than just numbers on a page.


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