Mortgage

Credit changes set to improve score for roughly 12 million consumers

Equifax, Experian, TransUnion to make changes

The three credit rating agencies will soon exclude tax liens and civil judgments from credit reports for many people, according to an article (tiered paywall) in The Wall Street Journal by Annamaria Andriotis.

Equifax, Experian and TransUnion will remove the tax-lien and civil-judgment data starting around July 1, helping omit negative information from the financial scorecards, the article noted.

From The Wall Street Journal:

The unusual move by the influential firms comes partially in response to regulatory concerns. The three reporting bureaus rarely tinker with the information that goes on credit reports and that lenders consult to gauge consumers’ ability and willingness to pay back debts.

Equifax, Experian and TransUnion recently decided to remove tax-lien and civil-judgment data starting around July 1, according to the Consumer Data Industry Association, a trade group that represents them. The firms will do so if those data don’t include a complete list of at least three data points: a person’s name, address and either a social security number or date of birth.

The move will help a decent amount of the population too. The article noted that roughly 12 million U.S. consumers, or about 6% of the total U.S. population that has FICO credit scores, will see increases in those scores as a result of this change.

The effort also falls in line with recent attempts from the government to widen the credit box.

Back in February, the Consumer Financial Protection Bureau announced it also joined a growing chorus of groups trying to expand debt access for consumers who lack enough loan history to obtain a credit score.

The CFPB said it was officially seeking public feedback on the benefits and risks of tapping alternative data sources, such as bills for mobile phones and rent payments, to make lending decisions about consumers whose lack of credit history might otherwise block opportunities.

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