by Daniel Sater - Nationally Recognized Credit Expert
It has long been a problem that Judgments and Tax Liens were sometimes not being reported correctly, or worse, being reported on the wrong person’s credit report. Coming July 2017, approximately 12 million consumers will have higher credit scores. This action is due to a settlement with 31 Attorney Generals and the Credit Bureaus, as well as pressure from the CFPB in an effort to have more accurate credit reporting.
What the Credit Bureaus Agreed To Do.
To solve one of the problems of inaccurate reporting, the Credit Bureaus will no longer report Tax Liens or Judgments that fail to include three of these four data points:
- Consumers Name
- Consumer’s Address
- And either, the Consumer’s Social Security Number, or, their Date of Birth
Most Tax Liens and Judgments Don’t Have the Three Data Points
Most people would make the assumption that of course this information would be there. But it is not! While it may be included at the Courthouses across the country, the Courthouses DON’T ever report information to the Credit Bureaus. The Bureaus hire a third-party like Lexis Nexis to research the Courthouse records and send that information back to them. Unfortunately, because of costs, seldom are the complete records included.
If the bureau doesn’t have these three points of data, the Tax Liens and Judgments will be deleted. This applies to existing Tax Liens and Judgments at the bureaus, as well as new any new ones being reported.
How Much of an Increase Might Be Expected?
The moment the information is deleted, your scores will go up.
The good news for consumers…96% of all Judgments will disappear and about half of all Tax Liens.
It is expected to raise credit scores about 20 points for most consumers, and, for some 700,000 consumers, they may see a boost of 40 points or more. It should be noted that a 40 point increase cuts in half the risk a consumer’s presents to a lender. Better interest rate; higher credit limits; and more people may be able to qualify for the credit they want.
What You Need to Remember
Just because a Tax Lien of Judgment may disappear for the credit report, doesn’t mean it will disappear from the Courthouses. You still owe the money and they can still come after you. But, at least you’ll have better credit.