Millions of consumers are about to benefit from credit reporting policy changes. Starting on July 1st, the three major credit bureaus, Equifax, Experian and TransUnion, will remove and exclude certain civil judgment and tax lien listings from consumer credit reports. This shift has the potential to positively impact the credit scores of millions of consumers.
Changes to Credit Reporting Policies Coming
Starting in July, Equifax, Experian and TransUnion will be more careful about which tax liens and civil judgments they will allow on the credit reports of consumers.
These types of items are listed on credit reports under the public records section, so they are factored into people's credit scores. But starting July 1st, the bureaus will stop listing information about tax liens and civil judgments unless there is more information.
This credit reporting policy shift will see the removal of liens and judgments from credit reports unless they include three specific pieces of information: (1) the consumer's name, (2) their address, and (3) their Social Security number and/or date of birth.
These changes come as a result of the large amount of scrutiny the three credit bureaus have been under lately. In the past year, the Consumer Financial Protection Bureau (CFPB) has already brought enforcement action against each of the three credit agencies.
The CFPB's investigations have also uncovered a number of problems with the credit bureaus' reporting practices. Basically, they don't believe the bureaus are doing enough to ensure the accuracy of the information that makes it onto consumer credit reports.
For example, the number one complaint consumers file with the CFPB is that they have incorrect information on their credit reports. These types of mistakes are widespread, but these new policies will ensure that information is more accurate when it comes to civil judgments and tax liens.
The Impact This Could Have on Your Credit Score
Now that reported tax lien and civil judgment information will have to meet much stricter identity-matching standards, many of these types of listings will be stricken from the credit reports of consumers.
To make a long story short, this ultimately means that the credit scores of millions of Americans are about to improve.
According to the Wall Street Journal, this purge could lead to score boosts of up to 40 points or more for around 12 million consumers. FICO, meanwhile, is more conservative in their projection. They think some 11 million consumers are in line to see their score increase by 20 points or less.
These improved standards and more accurate reporting practices will surely be welcome news for consumers with one of these unsubstantiated black marks on their credit reports.
Once we enter July, it might be a good idea to request your credit reports. You can make sure items that were supposed to be removed are taken off, while looking for other errors that may still be present that you can dispute.
The Bottom Line
If your credit score is about to improve as a result of these changes, you may become more creditworthy in the eyes of lenders. This could help you out in your search for an auto loan.
If you are dealing with less than perfect credit and need a car loan, you should know that Auto Credit Express wants to help. We can connect you with a dealership in your area that specializes in getting people dealing with credit challenges financed.
Get started right now by completing our car loan request form. It's free and it doesn't put you under any obligation to purchase anything, so you have nothing to lose.