Do Credit Bureaus Report Judgments & Tax Liens?

Posted By Law Office of Simon Goldenberg, PLLC || 9-Oct-2017

When it comes to obtaining personal loans, your FICO credit score is perhaps the single most important determining factor. Credit scores are calculated based on information that appears on your credit report. Due to recent changes, millions of consumers stand to see an improvement in their credit rating.(1)

The three leading consumer credit bureaus, Equifax, Experian, and TransUnion, have all made substantial changes to which information will appear on an individual's credit report, namely the exclusion of tax liens and civil judgements if they do not provide complete details about the consumer.

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Tax Liens and Civil Judgments

A tax lien is a legal claim issued on one’s personal assets that tends to occur when they have lapsed on payment of a tax debt. Tax liens may be entered by the Federal Government (IRS), or by a State's tax collection entity.

A Civil Judgment refers to any ruling against a defendant in a Civil court. These judgements can come about as a result of a lawsuit or the signing of a confession of judgment.

Prior to the recent changes, both civil judgments and tax liens would frequently appear on consumer credit reports through the reporting of public records data.(2)

Changes to Credit Reporting

As of July 1st, 2017, the three largest consumer credit-reporting agencies no longer include any information in regard to tax lien and civil judgements on credit reports that do not achieve their standard of accuracy. If a tax lien or civil judgement does not include an individual's name, address, social security number and/or their dates of birth, it will no longer appear on their credit report. Given that many tax liens and civil judgment filings don’t meet these criteria, a substantial number of them stand to be purged from consumer credit reports.(3)

These changes were not ordered by any governmental agency and are a completely voluntary action by each of the firms. While this information will no longer be present on consumer credit reports, lenders will still have access to this information via other data collection companies. Companies such as Chronos Solutions and LexisNexis will still be able to access public records and offer that information to lenders in a separate report.(4)

What the Changes Mean for You?

It has been reported by The New York Times (4) (via FICO statistics), that approximately 7% of Americans stand to have a tax lien or judgement removed from their credit report. If you are among those affected, your credit will likely change by a small, but not negligible, amount. FICO claims that the average increase in credit score amongst affected consumers will be around 20 points.

Credit Repair Lawyers in New York

While the recent changes are a move in the right direction, credit reporting issues continue to persist, and bureaus are not always quick to make corrections. Unfortunately, all too often, consumers find their credit reports to contain misinformation or records of outdated information that should be deleted. The Fair Credit Reporting Act (FCRA) is a federal law that was enacted to ensure accurate credit reporting and provides for monetary recovery in situations where the a credit bureau's unlawful conduct causes damages upon a consumer.

Our lawyers are experienced in analyzing credit reports and helping to dispute incorrect and outdated notations. We can also represent consumers in bringing legal action against credit bureaus and credit reporting agencies for violations of FCRA. If you're seeking the help of a professional advocate, call the Law Office of Simon Goldenberg PLLC today to learn how we can help you.

Have your rights been violated by a Credit Bureau?

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References:

  1. As reported by the Wall Street Journal, Citing FICO Data

  2. Sewell, Taelonda. (What is a Civil Judgement, https://www.legalmatch.com/law-library/article/what-is-a-civil-judgment.html)

  3. McCoy, Kevin (Consumer Credit Scores Reportedly Will Soon Exclude Tax Liens and Some Civil Judgments, https://www.usatoday.com/story/money/2017/03/13/reports-credit-scores-soon-exclude-some-debts-liens/99113572/)

  4. Cowley, Stacy. (Your Credit Score May Soon Look Better, https://www.nytimes.com/2017/06/26/business/dealbook/your-credit-score-may-soon-look-better.html)

*Not legal advice. For informational purposes only.

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