The three major nationwide credit reporting agencies—Equifax, Experian, and TransUnion—reached a settlement with over 30 state attorneys general, leading to the implementation of the National Consumer Assistance Plan (NCAP). This agreement aimed to enhance the precision of credit reports and simplify the process for consumers to amend inaccuracies. A significant condition of this settlement mandated the establishment of minimum criteria for the inclusion of personally identifiable information and the frequency of updates for civil public records such as bankruptcies, civil judgments, and tax liens on credit reports.
From July 1, 2017, the NCAP stipulated that civil public records must include a name, address, and either a Social Security number or date of birth to be listed on credit reports by the major credit bureaus. Additionally, it required that these records be updated at least every 90 days. This report examines the impact of reducing public records on consumer credit reports and scores. Although the accuracy of scoring models post-NCAP implementation will require two years of data for analysis, initial findings indicate significant effects:
The introduction of the NCAP led to the removal of all civil judgments and approximately half of the tax liens from consumer credit files, while the reporting of bankruptcies remained largely unaffected. Prior to the NCAP’s implementation in June 2017, 6 percent of consumers had either a civil judgment or tax lien on their credit report. Post-NCAP, around 80 percent of these individuals saw these public records removed from their files, resulting in only 1.4 percent of consumers having a tax lien and none having civil judgments on their credit reports thereafter. Approximately 4 percent of consumers who had civil judgments or tax liens on their credit reports in June 2017 (equating to 0.24 percent of all consumers) saw their credit scores increase sufficiently as a result of the NCAP to advance to a higher credit score band. This could mean moving from a subprime to near-prime category or from near-prime to prime. The data for this report are sourced from the Bureau’s Consumer Credit Panel, which is a longitudinal and nationally representative sample of around five million anonymized credit records maintained by one of the three major nationwide credit reporting agencies.
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