By Marianne Jennings
Through voluntary action, the three largest credit reporting companies have decided to not include information on your credit report that is drawn from public records. The type of information drawn from public records includes judgment liens and tax liens. The three companies concluded that they rally could not be sure, based only on the information available in the public records on these liens (which would be name identification), that they were accurately placing such information with the correct individuals. While federal law still permits such information in individual credit reports, the companies have decided to stop the practice because of several class-action suits pending against them. The suits are based on mistaken information in consumer credit reports, with most of the information related to liens gleaned from public records. Name association only is a risky proposition when adding information to credit reports.
Verification comes from matching birthdates, addresses, and locations. That detailed information is often not available from public records for a judgment lien. In addition to stopping the practice, the reporting companies will be removing all such existing lien information from consumer reports. Equifax, one of the three companies, had removed the lien information from one-half of the consumer reports last year, and had been continuing to monitor the accuracy. However, following that review, Equifax decided to simply remove the lien information. AnnaMaria Andriotis, "Credit Reports to Remove Tax Liens," Wall Street Journal, March 23, 2018, p. B...
Under the Fair Credit Reporting Act, for consumers to recover from the reporting companies for inaccurate information in their credit reports, they must notify the company of the inaccuracy in their report. The company then has a period of time to review the consumer's information and either remove any inaccuracies or explain why it believes the information to be true. If the credit company acts in bad faith and refuses to remove the information, the consumer is entitled to damages. The class-action suits are multi-million-dollar suits as a result of the Fair Credit Reporting Act provisions for consumer damages from inaccurate credit reports. One of the issues with liens is also that liens can be attached through error and require continuous monitoring for determining whether the lien is still valid. For example, if a taxpayer satisfies an IRS lien, its removal can be quite fast. The continuing presence of liens becomes problematic for the reporting companies in their accuracy.
Explains the risks of carrying lien information on credit reports.
Discuss the reasons the credit reporting companies are making the change.
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