Credit scores for millions of Americans may soon increase due to two major changes in credit scoring.
Starting July 1, the three major credit agencies — Experian, Equifax and TransUnion — are dropping certain negative information from credit reports, including tax liens and civil judgments.
The credit reporting agencies are finally getting an overhaul. The most important issue about credit reports is that incorrect information is on their reports. Credit reporting agencies such as Experian and TransUnion haven’t conducted invasive investigations when people dispute items.
On July 1st it’s anticipated that improved standards for new and existing public records in their databases will help in this regard. Some civil debts and tax liens will not be included, which means some credit scores will increase.
There are other changes which may affect credit scores, so hopefully this will give consumers more buying power. The changes came after an enforcement action against Equifax and TransUnion and their affiliates. According to the Consumer Financial Protection Bureau (CFPB) it was discovered that they deceived consumers about the value of the scores the companies sold them. A lawsuit was filed and now the companies have to pay more than $17.6 million to compensate customers, plus $5.5 million in penalties to the government. Ouch!