CLEVELAND, OH (WOIO) - The credit scores of several million Americans may have gone up this week, as a result of changes to how credit bureaus calculate those scores.
A 2012 Federal Trade Commission report found that about one in every five consumers, 20 percent, had an error on their credit report. In 2015, as a result of a settlement between the three major credit bureaus and 31 state attorneys general, the bureaus agreed to make a series of changes in order to avoid errors on those reports.
Some big changes took effect July 1.
In order to try to clear up report errors, the bureaus will now drop from credit reports any tax liens and civil judgements that don't have minimum consumer Personal Identification Information (PII). That minimum PII includes not just a name, but also an address, and a social security number or birth date.
The Fair Isaac Corporation, or FICO, analyzed the likely effects of the changes. FICO said in a report, that according to the credit reporting agencies, "it is very likely that civil judgment public record data will not be part of the CRAs' core consumer credit database."
FICO also expects to see "significant change anticipated to tax lien public record data." This, the FICO report states, is due to the fact that according to the credit agencies "as much as 50 percent of this data may not meet the enhanced standards and be removed from the CRAs' core consumer credit database."
Between six and seven percent of consumers are expected to be impacted the FICO analysis stated, but the changes will likely be relatively small, due to the fact that about 92 percent of that group is "very likely to have additional derogatory information on" a credit report. FICO estimated of the consumers whose scores would rise, on average, the increase would be up to 20 points.
For more information: annualcreditreport.com