Credit score relief: Some records out

By Gail MarksJarvis, Tribune News Service

Consumers who are dogged by poor credit scores — and have trouble getting credit cards or loans as a result — will get some relief.

As of Saturday, the three credit reporting companies stopped using some records that are especially damaging to credit scores: tax liens and civil judgments.

So if someone has gone after you in court for failing to pay what you owe, or a government has placed a lien on your assets, those records will likely disappear from your credit report. An estimated 12 million people could be affected by the changes.

Of course, most Americans don't have such a troubling past dragging down their credit history. But the new rules could also offer some benefit to people with unblemished pasts. According to the Federal Trade Commission, about 21 percent of consumers have damaging mistakes in their credit reports. So you could be meticulous about paying back every cent you oze on time and still have false information placed on your credit history by the computers that generate the information. 

The new rules should cut down on those mistakes, at least when it comes to liens and civil judgments. The three reporting companies — TransUnion, Equifax, and Experian — will no longer use those records when evaluating your credit unless they can match your name, address and either your Social Security or birth date to their records.

Fair Isaac Corp., which blends credit histories into a FICO score for each individual, estimated in a recent report that about half of tax lien, public record data will not be usable under the new rules. 

On the other hand, FICO said the new rules probably will not make a major difference in credit scores anyway. Typically, 92 percent of people with liens and judgments have other derogatory information in records that raise red flags, according to FICO. Bankruptcy records will continue to be used.

The changes are an outgrowth of a settlement involving 31 state attorneys general challenging errors in credit reports.

Published in Newsday, July 3, 2017