Why Many Civil Judgments and Tax Liens Have Dropped from Credit Reports

Posted on July 17, 2017 at 12:00pm by
Picture of Tax

As of July 1st, the three credit reporting agencies (TransUnion, Experian and Equifax) will no longer include civil judgments and tax liens on credit reports unless they contain accurate identifying information for affected consumers. Unless this data contains a Social Security number, date of birth, name and address, it will not be listed on the report. These credit bureau changes will affect millions of Americans.

According to a study conducted by Fair Isaac Corporation, the company that created the widely-used FICO models, 7 percent of the 220 million Americans with credit files will see their scores increase. An estimated 96 percent of civil judgments and 50 percent of tax liens will be removed from credit reports.

Civil judgments are what you owe after losing a lawsuit. Tax liens are a claim against one or more assets. The government may place a lien on these assets if you have failed to pay taxes. These can be a major blemish on your credit report.

What prompted the change in this case, is that the three credit rating agencies (TransUnion, Equifax and Experian), were using outdated or incorrect information. As a result, consumers who may have been creditworthy were unable to access credit. Many of these consumers lodged unsuccessful complaints with the three credit bureaus.

Will These Credit Bureau Changes Affect Bankruptcy Attorneys?

Due to these changes, bankruptcy attorneys may need another way to pull certain types of credit information for their clients. It is important to have a full picture of client’s finances when filing for bankruptcy, otherwise it would be much more difficult to move forward with the most effective strategies for debt relief.

If you are struggling with your finances due to excessive debts, the Kansas City bankruptcy attorneys at The Sader Law Firm can help you explore possible options for debt relief.

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