Credit Reports Won’t Show Judgments or Liens

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Credit reports are changing! A better credit score may be right around the corner. Starting this week, some people will enjoy a credit score increase of up to 20 points. This is because the three major credit bureaus will enforce stricter reporting regulations.

What does this mean? Civil judgments and tax liens will vanish from most credit reports. This is because civil judgments and tax liens don’t carry enough identifying information to meet new credit reporting standards. You can expect that tax liens and civil judgments will no longer be recorded as part of your credit.

According to a report by Fair Isaac (home of the FICO score), about seven percent of Americans can expect an increase in their score due to the removal of judgments and liens from their file.

Why the Change?

The Consumer Financial Protection Bureau (“CFPB”) recently recently recommended changes to the major credit reporting companies.  The CFBP based their recommendations on frequent consumer complaints. In fact, the CFP reported that the number one consumer complaint was that credit scores often include inaccurate information.

Previous credit report standards left a lot of room for error. Credit reports often included civil judgments for other people. Surprisingly, civil judgments contain very limited identifying information.

People with inaccurate judgments on their credit reports will benefit the most from this change. However, consumers needs be aware that accurate court judgmenets might not show up on their credit reports in the future.

Other Changes Afoot

This isn’t the only major credit reporting change on the agenda.

Starting next month, credit bureaus will have to keep a closer eye on the public records they are reporting. Credit reporting agencies will update their information at least once every 90 days.

Starting in September, credit reports will no longer include medical debt less than six months old.

There is currently no plan to eliminate bankruptcies or foreclosures from credit reports.