Over the past year and a half, the big three credit bureaus of Equifax, TransUnion and Experian have made some subtle yet important changes to the way negative information is reported on credit reports.
What does this mean for you? It could mean that your FICO credit score has risen recently—even if your debts and monthly payments haven’t changed.
Following a study by the Consumer Financial Protection Bureau, all three credit bureaus began scrubbing all civil judgments and tax lien data from credit reports. According to the consumer data analysis company LexisNexis Risk Solutions, about 11 percent of the consumers will have a judgment or lien removed from their credit report. Although that is relatively small, for those who do have a judgment or lien removed, LexisNexis has found that those particular credit scores have risen as much as 30 points.
Another change is that medical bills that are being paid (or have been paid) through insurance will no longer be reported, unless that debt is over 180 days old. According to the Federal Reserve Bank of New York, “in the past ten years alone, more than 40 percent of individuals with a credit report had a collections account” and “52 percent of unpaid collections accounts were associated with medical debts.”
Finally, in terms of all types of collections accounts, Equifax, TransUnion and Experian no longer report unpaid debts if debt collectors are not actively pursuing those debts. Because of this change, the number of consumers with a collections account on their credit report between June 2017 and June 2018 fell from 33 million to 25 million—a whopping 24 percent.
Although these changes are certainly for the better, make sure you're still checking your credit report on a regular basis.
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