Why your credit score might go up
In mid-2017, the three major credit reporting agencies, Experian, Equifax and Transunion, implemented policy changes that will impact consumer credit scores. The policy changes came as a result of settlements between the three agencies and 31 states. Fortunately, the impacts of the changes on consumers are mostly positive.
As part of the shift in policy, Experian, Equifax, and Transunion all began excluding certain civil debt and tax liens. The credit bureaus have recognized the significant damage to consumer credit due to the use of erroneous “matching logic” – a policy which assigns credit information to consumers. The hope is that removing all civil judgments and about 60 percent of tax liens from consumers’ credit score calculations will reduce matching logic errors.
Only tax liens and judgments that contain all three pieces of the following information will be removed from a credit score calculation
Social security number or birth date
Duplicate reports, also known as “dupes,” can occur due to confusion about consumers with the same name, or incorrect entries from creditors. When the bureaus’ matching logic places credit info with the wrong report, it is up to the consumer to discover the mistake and then prove to the bureaus that a mistake has occurred.
The damage from duplicate or erroneous credit reports can seriously impact a consumers’ ability to obtain credit, and prior to the policy changes, consumers had few ways to resolve the issue. The most common remedy involved annual credit report checks. Consumers are encouraged to check their credit report annually (at least) to ensure that all information reported is accurate and up to date. However, it is common for such advice to focus solely on discovering creditor or bank errors, rather than duplicate reports.
Consumers could also turn to the Fair Credit Reporting Act for rules and laws governing identity theft and false reporting, but the only remedy for dupes has been to have a credit reporter manually review a report and eliminate any entries that did not belong exclusively to the consumer. With the new policy changes, the bureaus are hoping to eliminate the source of most of the problems associated with dupes and other incorrect credit reports.
Improved scores, increased scrutiny
The new policy is set to affect between 12 and 20 million Americans with increases in credit scores of up to 20 percent. Policy changes to the matching logic took effect on July 1, 2017, so if you have yet to check the impact on your credit score, now might be a good time to do so.
But not all of the impacts are positive. Due to the elimination of these records from credit reports, consumers can expect stricter lender scrutiny. Lenders may be inclined to pay greater attention to – and place greater weight on – each item that actually is on a credit report.
A score increase is only a one-time boost, so borrowers should continue their credit repair efforts regardless of how their credit score is impacted. One of the easiest ways to quickly repair credit is to use the services of Boost My Score. As an authorized user on one of their high-limit, low-balance credit cards, consumers can easily experience an immediate FICO credit score boost – guaranteed.