Tax Lien Removal

Tax Lien Removal

New standards for how tax liens and civil judgments are included in credit reports will go into effect on July 1. These changes are part of the National Consumer Assistance Plan (NCAP), an initiative of the three nationwide consumer reporting agencies (CRAs) – Equifax, Experian and TransUnion – to enhance the accuracy of credit report information and to improve the experience consumers have when interacting with the CRAs about their credit report.

Beginning July 1, public record data collected for credit reporting purposes, including bankruptcies, civil judgments and tax liens, must contain minimum identifying information and be collected at more frequent intervals as follows:
• Minimum reporting of: (1) Name, (2) Address, and (3) Social Security Number and/or date of birth; and
• Minimum frequency of courthouse visits to obtain newly filed and updated public records of at least every 90 days.

The changes to public record reporting requirements will have an impact on consumer reporting databases. While bankruptcy public records already meet the enhanced standards, civil judgments and approximately half of tax liens are not expected to satisfy the enhanced standards and will no longer be reported.

These changes will be applied to the CRAs’ consumer reporting databases in July 2017. Modifications will be visible on credit reports soon after.

“It’s important that consumers understand the impact of how these liens and judgments are reported,” said Francis Creighton, President & CEO of the Consumer Data Industry Association, a trade group representing the CRAs. “The changes that the CRAs are making will improve the quality and currency of data reported, ensuring that the credit reporting system stays strong.”

Analyses conducted by the CRAs and credit score developers FICO and VantageScore show only modest impacts to credit scoring and predictive performance because of the public records changes.

Launched in March 2015 after cooperative discussions and an agreement with a group of State Attorneys Generals, the NCAP includes multiple initiatives to be completed over a three-year period to improve data accuracy and quality, and make it easier for consumers to understand their credit information.