Credit reporting standards for civil judgments and tax liens to change July 1

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An informative new American Banker podcast discusses recent and possible future changes to traditional credit scores, what they mean for industry, and possible industry responses.

The podcast begins with a discussion of changes that will take effect on July 1, 2017 to the public record data standards used by the “Big 3” consumer reporting agencies (CRAs) for the collection and updating of civil judgments and tax liens.  The new standards, which will apply to new and existing public record data on the CRAs’ credit reporting databases, create new verification requirements for data about civil judgments and tax liens, such as certain minimum consumer personal identifying information and a minimum frequency of courthouse visits to obtain new and updated data of at least every 90 days.

The experts participating in the podcast suggested that under current credit score models, the change could result in small credit score increases for impacted consumers averaging about 10 to 11 points.  However, they indicated that credit scores generated by newer credit score models under development that consider other data are unlikely to be impacted.

Among the topics discussed was the potential benefits and challenges in using alternative data in credit score models.  This past February, the CFPB issued a request for information seeking information about the use of alternative data and modeling techniques in the credit process.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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