Changes to the reporting of public records on credit bureaus last year have begun to yield improvements to credit scores for some consumers.
The
National Consumer Assistance Plan was launched in March 2015 by the three major credit repositories — Equifax, Experian and TransUnion.
Behind the development of the plan was a settlement between the three credit bureaus and attorneys general from more than 30 states.
Included in the plan, which went into effect on July 1, was a provision that requirements for the reporting of public records be expanded.
The provision required that public record data furnished to the bureaus for credit reporting include the consumer’s name, address and Social Security number as well as the date of birth. In addition, the information had to be refreshed at least every 90 days.
Donald Clement Jr., the southeast regional sales manager of Credit Plus Inc., estimated in April 2017 that the change could boost credit scores for as many as 11 million consumers by as much as 20 points because the bureaus would stop reporting many liens and and most judgments since they don’t include the required data points.
In its February 2018 Quarterly Consumer Credit Trends, the Consumer Financial Protection Bureau analyzed the impact of the changes on credit scores and examined the credit profiles of consumers who were affected.
A month prior to the implementation, consumers with judgments or liens had credit scores that were 119 lower than consumers without them, the bureau said.
The report indicated that the number of tax liens reported went from around 11 million in June 2017 to fewer than 6 million the following month. The degree of decline varied by state.
Even more impacted were civil judgments — which plunged from more than 15 million to zero.
There were no changes to the more than 11 million bankruptcies that were reported as of June 2017.
“Up until June, consumers who held active judgments did not observe much score change quarter-to-quarter,” the report said. “However when all judgments were eliminated from records in July, the credit scores of consumers with active civil judgments increased. For those with an active judgment (about 8 million consumers), 65 percent experienced an increase in credit score greater than 5 points. For those with only inactive judgments (about 2 million consumers), 46 percent experienced such an increase in credit score.”
Score changes for consumers with both civil judgments and tax liens was either around zero or 15 points.
Roughly 17 percent of consumers with liens or judgments in June found themselves in the next-higher bucket of credit scores as of September.
In addition, around 6 percent of borrowers with judgments and liens who had subprime credit scores of less than
620 in June 2017 saw their scores rise to near 620 or higher as of September 2017.
