Credit Report Changes Coming in 2017, What You Need to Know

Regulators are increasing the pressure for credit bureaus to offer more consumer-friendly practices in their businesses. The result of increased legislative involvement for consumers is an easier dispute process, more accurate credit reports, and overall higher consumer credit scores, within the past few years.

The most recent challenge came from the Consumer Financial Protection Bureau (CFPB), which reported an increased need for accuracy regarding public records reported in consumer credit files. They expressed concerns over the lack of accuracy and the lack of frequent updates to public collection records, particularly in the area of judgments and tax liens.

The three major credit bureaus, TransUnion, Equifax, and Experian, responded unanimously by promising to eliminate most tax liens and judgments from consumer credit files beginning in July of this year. To remain on a consumer’s credit file, all tax liens and judgments must include the individual’s name and address along with either a birth date or social security number. Companies reporting these items must also update the public record at least every 90 days. The credit bureaus will delete any account failing to meet the new standards.

Currently, the majority of tax liens and judgments do not meet this higher standard, which will result in their removal from credit files. FICO estimates nearly 12 million consumers will achieve higher credit scores due to the impending changes. An estimated 700,000 credit scores will rise more than 40 points, while another 11 million will see increases of less than 20 points.

Companies have the ability to check public records for judgments and tax liens individually. However, the changes protect the consumer’s financial scorecard, including both the credit report and credit score, from containing or considering these records in the reports and scoring calculations.