Starting July 1, the three national credit reporting agencies will stop collecting and reporting information on lien and judgement data obtained from public records, leaving lenders with a significant hole in their assessment of a borrower’s creditworthiness.
To fill that information gap, two subsidiaries of CBC Companies — CBCInnovis and Factual Data — are offering the LexisNexis RiskView Liens & Judgments Report.
According to LexisNexis Risk Solutions, the move by Equifax, TransUnion and Experian will eliminate about 50% of tax liens data and 96% of civil judgments data from their credit reports as part of their National Consumer Assistance Plan. The bureaus decided to stop collecting the data, according to this article in the Chicago Tribune, because of the difficulty of getting accurate data from public records sources that meet “enhanced” data standards.
But a study by VantageScore Solutions estimates that the elimination of civil judgment and tax liens from credit reporting would give up to 8% of consumers an average score increase of 10 points, which could obscure the true risk for lenders in giving them loans. And an internal study by LexisNexis found that borrowers who have a judgment or tax lien are 5.5 times more likely to end up in pre-foreclosure or foreclosure, as compared to borrowers who don’t have judgments and tax liens.
As a result, LexisNexis developed the new RiskView report, which will now be offered by both CBCInnovis and Factual Data starting in July.
“The report will assist a lender’s ability to assess an applicant’s ability to pay, minimize related closing delays and comply with investor requirements,” said Tim Coyle, senior director, real estate and mortgage at LexisNexis Risk Solutions.
Jay Giesen, senior vice president of Factual Data, said, “Aligning with industry leader LexisNexis was critical in our efforts to addressing this impending information gap for our customers. Factual Data is proud to provide to our customers a FCRA product that will be fully integrated into their current credit report format, helping them to continue to thoroughly assess consumer credit worthiness.”
Similarly, Ken Viviano, senior vice president at CBCInnovis, heralded the company’s new offering.
“CBCInnovis recognized our customers’ need to address the imminent information gap that will be created in the marketplace with this change,” Viviano said. “Subsequently, we proactively aligned with industry leader LexisNexis in seeking a solution to fill that void.’