Equifax, Experian, and TransUnion, the nation’s three largest credit reporting agencies, announced back in March of this year that beginning July 1 they will no longer include tax liens and civil judgments on credit reports. (USA Today Article) Typically, this information has appeared on credit reports under a separate section from those sections listing active debts. By removing this information from credit reports, the overall effect could be a nationwide increase in credit ratings beginning soon.
The bureaus announced that the rule change was an effort to cut down on incorrect or incomplete information. Reports to the bureaus that include a consumer’s name, address, Social Security number and/or date of birth will still be included on credit reports. Many times tax liens or civil judgments don’t contain all of this information for privacy reasons. This means that a judgement or lien can show up on the wrong person’s credit report due to incomplete information.
It remains to be seen in the coming months whether this change will provide more harm than benefit. The credit report is designed in part to give lenders an idea of a particular consumer’s creditworthiness. If lenders cannot see tax liens or judgments, then they don’t have the full picture with regard to that person’s ability to repay a loan. The end result may be more loans made to people who cannot repay them.
At Bond & Botes, we help people clean up their credit reports through the bankruptcy process. If you have loans or other debts that you’re struggling to repay or want to make sure that your credit report is clean of any negative marks, then I encourage you to make an appointment to speak with one of our experienced attorneys. We have convenient offices in Alabama, Mississippi, and Tennessee, and we provide free initial consultations.
Nick Gajewski is an Associate Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Arts from the University of Alabama, and a Juris Doctorate from the University of Alabama School of Law. Nick joined the team of Bond & Botes bankruptcy lawyers back in 2014 and has been helping clients navigate financial issues since. Read his full bio here.