Credit Bureaus Removing Tax Liens from Credit Scores

From Forbes.com

Starting next month, you might notice a boost to your credit score.

Here’s what you need to know.

Credit Scores: What’s Changing?

Beginning today, the three major credit bureaus - Experian, Equifax and TransUnion - will exclude tax liens from credit reports. Since tax liens can adversely impact your credit score, their removal could benefit your score.

This follows adjustments from last July in which the three major credit bureaus removed almost all civil judgment data (think: a consumer who owes unpaid money as a result of a civil lawsuit) and about half of tax lien data (think: a consumer owes unpaid taxes) from credit reports.

 

Today, the remaining tax lien data will be removed. Approximately 5.5 million credit reports are expected to be impacted.

How will your score change?

It depends.

Consumer experts differ on the precise numerical impact as a result of this change. According to LexisNexis Risk Solutions, a credit score could improve by as much as 30 points when tax lien data is removed.

It’s also possible that there is minimal or no impact to your credit score as a result of this change.

Consumers with strong credit likely would see minimal impact to their credit scores with the removal of such data, while consumers with weaker credit could experience a higher impact.

The Consumer Financial Protection Bureau (CFPB) found that when public records for judgments or liens were removed from credit files, credit scores were impacted as follows:

1. 75% remained in the same credit score band

2. 17% moved to a higher credit score band

3. 6% moves to a credit score band of prime or above

4. 66% stayed subprime or deep subprime

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