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What changes are coming to your credit report?

This coming weekend, most people will understandably be preoccupied with all things Fourth of July from hosting backyard barbeques and pool parties to attending parades and finding a good spot for fireworks.

As such, people might not realize that starting Saturday, the three major credit bureaus -- TransUnion, Experian and Equifax -- are instituting a major change intended to help improve the transparency and accuracy of their credit reports.   

What is this major change?

Starting July 1, new and existing data concerning public tax liens (i.e., unpaid taxes) and civil judgments will be excluded from consumer credit reports if it fails to conform with newly established reporting standards.

Furthermore, the credit bureaus will be required to verify the accuracy of this public record information continuously through courthouse trips every 90 days.

What are the newly established reporting standards?  

All new and existing data concerning public tax liens and civil judgments will need to include the following in order to make it onto a consumer credit report: the person's name, address, and either a date of birth or Social Security number.

Is this change by the credit bureaus expected to make any difference?

According to industry experts, close to 50 percent of tax lien records and the "vast majority" of civil judgment data won't satisfy the new reporting standards.

As to the impact this will have on the credit scores of the nearly 12 million consumers affected by the new standard, experts are predicting it will be negligible. Specifically, estimates from FICO show that 11 million will see their scores jump by less than 20 points, while roughly 700,000 will see their scores jump by 40 or more points.

Why is this being done?   

As mentioned above, this and other changes are being undertaken as part of an overall effort to improve the transparency and accuracy of credit reports.

As for the impetus behind this tightening of credit reporting rules, it stems from a settlement reached back in 2015 between the three credit bureaus and the attorneys general of 31 states addressing the widespread problem of credit reporting errors.  

It will be interesting to see how this plays out in the coming months …

If you would like to learn more about your debt relief options, consider speaking with a skilled legal professional who can answer your questions and outline options

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