News & Trends

Here’s Why Your Credit Scores Could Jump This Week

If your credit scores are a little higher all of a sudden and you can't figure out why, there's an explanation.

Starting April 16, all three credit bureaus (Experian, Equifax, and TransUnion) will remove all tax liens from consumer credit reports. If you're facing a tax lien, that information could be dragging your credit score down by as much as 30 points on the FICO® scale of 300 to 850, according to LexisNexis. With all tax liens stricken from the credit record, some consumers may see a jump in their scores.

The change is a result of a Consumer Financial Protection Bureau Study that reported issues with the way information was sent to credit bureaus. Last July, all three bureaus implemented changes to how they would include items such as civil judgments and tax liens on consumer credit reports.

The new rules required that public records data, such liens, and civil judgments, had to contain a consumer's name, address, Social Security number, and/or date of birth. The information also had to be refreshed every 90 days. If public records data did not meet this criteria, they had to be excluded from credit reports.

As a result, 96% of civil judgments and 50% of tax liens had been removed from credit reports since last summer. Now, the credit reporting agencies will eliminate the last remaining tax lien data from consumer credit reports, which is about 5.5 million records, reports American Banker.

According to LexisNexis Risk Solutions, a data firm that supplies such public record information, only about 11% of consumers will see a change to their credit reports as a result of this action and scores could increase by as much as 30 points overall.

However, the Consumer Data Industry Association, which represents the three credit bureaus, said in a statement last year that "analyses conducted by the credit reporting agencies and credit score developers FICO and VantageScore show only modest credit scoring impacts."

Whether your report is affected or not, be sure to check your credit reports from all three bureaus to ensure the information is accurate.

Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
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