Why Millions of Credit Scores Will Be Increasing Soon
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Consumers can look forward to more than sunshine this summer. Starting July 1, some people might see some good news on their credit reports. Equifax, Experian and TransUnion are all planning to reevaluate two pieces of information that have been negatively impacting credit scores: tax liens and civil judgments. The change stems from lawsuits in more than 30 states, which claimed that these negative marks are often attributed to the wrong people. That’s especially troublesome considering the fact that they typically stay on a credit report for seven years.
Now, if these liens or judgments do not match three of four key criteria — name, address, birthdate and Social Security number — they will be removed from a consumer’s credit report. According to a recent report on NBC Nightly News, the changes will translate to good news for quite a few Americans. FICO forecasts that about 11 million consumers will see an increase of approximately 20 points.
Okay, I know what plenty of TPG readers are thinking: A 20-point increase doesn’t exactly sound like a massive game-changer. However, every point counts when you’re applying for a new credit card, a mortgage or any other loan. Creditors evaluate scores differently, but it’s common to divide scores into excellent, good, fair, poor and bad categories. Even a small increase has the potential to elevate your standing to an entirely new class of credit.
Examining Your Report for Errors
Earlier this month, the Consumer Financial Protection Bureau reported that it has processed more than 185,000 credit reporting complaints since 2012. Those complaints aren’t confined to tax liens and civil judgments, either. Mixing up a report with someone else who shares the same name, failing to mark a loan as “closed,” including fraudulent accounts and more — the list of potential mistakes you might discover on your credit report is long.
There are plenty of opportunities to check your credit score for free, but the score doesn’t paint the complete picture. That’s why it’s crucial to check your credit report, too. You don’t have to sign up for expensive credit monitoring services, though. Federal law grants you a free annual report from each of the three major agencies. If you do find an error, take steps to address the problem immediately. You can submit a dispute online — here’s where to start with Equifax, Experian and TransUnion. I wish you the best of luck and hope you don’t have to add your name to the CFPB’s lengthy list of complaints.
Have you ever filed a dispute with a credit agency? Were you successful? Share your story in the comments section below!
Featured image courtesy of scyther5 via Getty Images.
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