CFPB Report Focuses on Removal of Civil Public Records from Credit Reports

Written By ESR News Blog Editor Thomas Ahearn

On February 22, 2018, the Consumer Financial Protection Bureau (CFPB) – a U.S. government agency responsible for consumer protection in the financial sector – released the latest Quarterly Consumer Credit Trends report that focused on the removal of civil public records from consumer credit reports.

In March 2017, three nationwide credit reporting companies – Equifax, Experian, and TransUnion – entered into a settlement called the National Consumer Assistance Plan (NCAP) requiring them to increase the accuracy of credit reports and to make it easier for consumers to correct errors.

Part of the settlement with over 30 state attorneys general requires the three nationwide credit reporting companies to create minimum standards for personally identifiable information (PII) and reporting frequency for civil public records, including bankruptcies, civil judgments, and tax liens.

Starting July 1, 2017, the NCAP required all civil public records to have a name, address, and a Social Security number (SSN) or date of birth (DOB) before appearing on credit records from the credit reporting companies and also required the information to be refreshed at least every 90 days.

“The enhanced standards, which will be implemented on July 1, will have an impact on consumer reporting databases – particularly with civil judgment data where a vast majority of data may not meet PII requirements,” the Consumer Data Industry Association (CDIA) explained in a March 2017 statement.

The CFPB report – which explored how the implementation of the NCAP affected the credit records and scores of consumers – found that all civil judgments and about half of the tax liens on consumer credit records were removed. However, the number of reported bankruptcies remained virtually unchanged.

The report revealed that 6 percent of consumers had a civil judgment or tax lien before the NCAP was implemented, and public records for around 80 percent of these consumers were removed. After the NCAP, 1.4 percent of consumers had a tax lien on their credit report and none had civil judgments.

The report also found approximately 4 percent of consumers with civil judgments or tax liens on their credit record in June 2017 – 0.24 percent of consumers overall – experienced a large enough increase in their credit score as the result of the NCAP implementation to move into a higher credit score range.

“Equifax, Experian, and TransUnion continually seek ways to ensure the data they maintain on their consumer credit files is accurate and current, to best serve consumers and the needs of their business and government customers,” CDIA Interim President and CEO Eric J. Ellman said in the March 2017 statement.

For more information, read the blog ‘Removal of public records has little effect on consumers’ credit scores’ by Jasper Clarkberg and Michelle Kambara that is available at www.consumerfinance.gov/about-us/blog/removal-public-records-has-little-effect-consumers-credit-scores/.

In March 2017, ESR News reported that the CFPB released a report – Supervisory Highlights Consumer Reporting Special Edition – that detailed problems in the credit reporting industry such as fixing data accuracy, repairing broken dispute processes, and cleaning up reported information.

The report focused on CFPB supervision of Consumer Reporting Companies (CRCs) that sell information in consumer reports to creditors and other users and what significant advances CRCs have made to promote greater data accuracy, dispute handling and resolution, and oversight of data furnishers.

ESR News also reported on recent fines ordered by the CFPB against the three nationwide credit reporting agencies for deceiving consumers about credit scores. The CFPB fined Experian $3 million in March 2017 and fined TransUnion and Equifax more than $17.6 million combined in January 2017.

As of February 2018, eleven states – California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington – and the District of Columbia (D.C.) have laws that restrict the use of the credit reports of job applicants by employers for employment purposes.

Employment Screening Resources (ESR) has created a whitepaper entitled ‘States with Laws Regulating Credit Reports for Employment’ that will help employers understand these laws at www.esrcheck.com/Tools-Resources/Whitepaper-Library/States-with-Laws-Regulating-Credit-Reports-for-Employment/.

ESR Provides Employment Purpose Credit Reports

Employment Screening Resources (ESR) – a global background check firm – provides consumer credit reports for employment purposes that comply with federal and state restrictions on the use of credit reports by employers. To learn more, visit www.esrcheck.com/Background-Checks/Identity-Credit/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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