WASHINGTON – It could be a boon for some home buyers — their credit scores will get a surprise boost — but worrisome for mortgage lenders, landlords and others who depend on credit reports to evaluate their potential customers.
In a little-known policy shift, the three national credit bureaus — Equifax, Experian and TransUnion — plan to stop collecting and reporting substantial amounts of civil judgment and tax lien information on public records affecting millions of American consumers starting July 1. Both types of information have negative impacts on credit scores and remain in credit files for extended periods.
Tax liens are levied against properties when the owner is delinquent on payment of taxes. Civil judgments are ordered by courts in legal disputes, typically involving monetary damages — debts owed by the losing party. With the elimination of this information from vast numbers of consumer credit files, some lenders are concerned that when they order credit reports to evaluate an applicant, they may no longer get the full picture of the risk of nonpayment posed by the consumer.
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