Changes Coming to Credit Reporting
Beginning July 1, 2017, TransUnion, Equifax, and Experian plan to stop collecting and reporting information related to civil judgments and tax lien information. The change, which will affect millions of American consumers and their credit scores, is said to be in response to a 2016 settlement with 31 state attorney generals over alleged problems with credit reporting accuracy and the correction of errors on credit reports. Once civil judgments and tax liens are removed, lenders and credit analysists will have a less complete picture on the credit-worthiness of applicants. According to LexisNexis Risk Solutions, individuals with civil judgments and tax liens are “5.5 times more likely to end up in serious default or foreclosure compared with borrowers who don’t’ have such items in their files.” Without this important information, lenders must be more diligent in researching potential borrowers and should consider seeking supplemental information outside the three national credit bureaus when vetting borrowers.