As the result of discussions between a group of state Attorney Generals and the three major credit reporting agencies (Experian, Trans Union, Equifax) the National Consumer Assistance Plan (NCAP) was announced in 2015. The plan is designed to provide more transparency and accuracy in consumer credit reports.
The major focus of this change will be in the area of public records. As of now the consistency in which this information is gathered and the accuracy of some of the information is sporadic at best.
One of the issues is that the courts do not actually report public records. The credit bureaus have outside sources that periodically visit courthouses around the country to compile the information from court records for the public records that appear on consumer credit reports. This can be challenging for a number of reasons: How information is maintained varies from court to court, accessibility to some courts and their records can be difficult and tracing the documents back to the origin of point of collection can be prohibitive at times.
Under the new plan there are two main focuses:
1. The very minimum request to correctly identify the consumer (PII) – This would include name, address and social security number or date of birth.
2. The frequency of visits to courthouses to obtain updated public records – The minimum would now be every 90 days.
So what does this mean?
For civil judgments they expect a significant change. Their analysis showed that as much as 96% of this information does not meet PII requirements. Most judgments do not have a social security number or date of birth attached to them. Since this information cannot be verified, these items would have to be removed from the consumer’s report.
For tax liens their analysis showed that 50% of these did not meet PII requirements.
The only public records that most likely will not change are bankruptcy public records. Almost 100% of these meet PII requirements as they all have social security numbers attached to them.
These changes are expected to occur by July 2017 and will include all new and existing public records. Analysis is still being done, so changes to this plan may, and most likely will, occur before it is fully implemented. Based on preliminary findings FICO predicts the impact of the changes on FICO scores to be “moderate.” However if a consumer has a clean credit report other than perhaps one judgment, the removal of that could actually have a fairly significant positive impact on the credit scores.
In the coming months there will be more information available as to exactly how all this will be implemented and any changes they may make in their existing plan. For now it is certainly a step in insuring the accuracy of public record information on credit reports, which today is certainly lacking.