Change in Public Records Reporting
What is a Public Record? Tax Liens, Judgments and Bankruptcies are credit items that are on file with the government. These can report on the credit report and have a severe detrimental impact to the credit scores as well as the underwriting of a loan. Mortgage lenders have strict guidelines that may prevent the purchase of a home when these items appear on the credit report.
In July of 2017, Experian, Equifax and Transunion changed their standards to report public records. The goal was to cut down on identity related errors when it comes to public record reporting. The move will cut back about 50% of tax lien reporting and 96% of civil judgment reporting. After this increased scrutiny put on public record reporting, many Americans saw these items drop from their reporting on Experian, Equifax and Transunion. This may have given many Americans a false sense of hope. The hardest thing to understand is that these items still exist with the government records and may not have been resolved.
With the lack of reporting, this caused a problem with mortgage companies and their underwriting. A mortgage company does not want to be the second lien holder to the government in the case of a tax lien. They also want to make sure they are lending to someone who will pay them back. LexisNexis did a study and found that borrowers with this public records data such as tax liens and judgments are 5.5 times more likely to default on their loan. This is why supplemental reporting is necessary to make up for public records that are not reporting to the credit bureaus.
Shortly after this change to public record reporting LexisNexis Risk Solutions began to provide this data to mortgage companies on their credit reports, this is known as LexisNexis RiskView Liens & Judgments Report. This data does not impact the scores, but it does impact the underwriting of the loan. Consumers can be easily confused by this; after reviewing their credit information with a credit monitoring service they may not be aware of any public records. Afterwards they apply for a mortgage loan and are surprised to find a public record reporting. The mortgage credit report will typically report the public record with the LXN abbreviation next to the item instead of the bureau name or abbreviation.
This new reporting does not fall under the same purview as other negative items that report to Experian, Equifax and Transunion when it comes to disputing these items. We do have a process to challenge these items through LexisNexis directly. For more information about this and other items impacting the credit rating, please contact us directly.
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