Many Consumers Could See Credit Score Increases

August 10, 2016

A significant change is in the works for consumer credit reports. As reported on, a 2015 settlement brokered by 31 state attorneys resulted in a National Consumer Assistance Plan, one part of which involves a significant reduction in “the amount of tax-lien and civil-judgement information found in consumer files.”

The change is currently in the testing phase, but is expected to be put into place by the summer of 2017, at which point much less of this type of data will be found in consumer credit reports.

According to the piece the credit scoring model VantageScore has conducted a study exploring the impact these changes could have on the industry. In looking at a sample of US consumer reports they found that as many as 11 percent could have tax liens or civil judgements removed, which could result in “an average score increase of 11 points” should all of them be removed.

What may be most significant is when the score moves consumers into new brackets of eligibility for credit. For example, the VantageScore model revealed that “33.6 percent of consumers with scores between 581 and 600 saw their scores increase to between 601 and 620 when the lien and judgment data was removed. And 33.1 percent of consumers with a score between 601 and 620 saw their score bump up into the 620-to-641 range.”

Because the minimum score for many government backed mortgage programs is 580 and for many conventional programs 620, this change could open up home buying opportunities for many people.

As the changes are implemented education will be key. Many consumers may not be aware that this is happening, how it could impact them, and that it could make homeownership a real possibility where it may not have been previously. It’s not too early to discuss the issue with applicants for whom credit scores are standing in the way of approval, but aren’t far from the minimum requirements.

Once we see how exactly scores are changed when many of these tax-liens and civil-judgments are removed it may make sense to do some outreach to prior borrowers and/or applicants who may be affected to suggest checking on their credit and discussing home buying or refinancing options that may now be available to them.

Photography by [Rabia Elif Aksoy] ©

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