With the credit bureaus’ new National Consumer Assistance Plan (NCAP) hot on our heels, it’s starting to look like these future changes could actually improve millions of U.S. credit scores. While a score boost definitely rears in the rental applicants’ favor, these new standards might be a little disconcerting for property managers and property owners where tax liens and civil judgments play an important role in the rental decision.
What is the National Consumer Assistance Plan (NCAP)?
Announced September of last year, NCAP establishes new standards (or personal identifying information) for a record to appear on a consumer credit report. As we’ve stated in a previous article, new and existing public record data will have to adhere to these two standards:
- The minimum is required of consumer identifying information: name, address, social security number and/or date of birth
- The minimum frequency (at least every 90 days) of courthouse visits to obtain newly filed and updated public records is required
NCAP will be applied to all new and existing public record data used by Experian®, Equifax®, and TransUnion® on July 1, 2017.
While Experian® and the other bureaus “anticipate no change to bankruptcy public record data” since bankruptcies are typically filed with the minimum consumer ID information, like SSN (which passes standard #1), this will affect civil judgment public record and tax lien data. In fact, the preliminary analysis by Experian® projects that about 96% of civil judgement data might not meet the new standards. For tax lien data, they’re expecting “as much as 50% of this data may not meet the enhanced PII requirements.”
What Does this Mean for Property Managers, Owners, & Renters?
As an estimated 96% of civil judgement data and as much as ½ of all tax lien data does not meet the new standards, records that do not comply with PII will be removed. This means, if a property manager or landlord’s rental applicant has a civil judgement record (like an monetary eviction), but that civil judgment data is incomplete in some way (for example, it’s missing the applicant’s SSN or date of birth), then that data will be removed. That eviction record will not impact the rental applicant’s credit score (FICO®, VantageScore®). So if you were depending on your applicant’s credit report to clue you in on evictions or other civil judgments, you will want to get that eviction data from a different source such as Contemporary Information Corp.
This removal of unstandardized data, as an effect, is expected to slightly boost credit scores across the U.S. VantageScore® suspects in their initial impact analysis that (in worst case scenario) a little over 8% of the scorable U.S. population will have a change in score. FICO®, one of the most widely used scoring models, are expected to release an impact analysis within the next month.
In the coming months insure that your tenant screening provider’s eviction and criminal data is up to par with your standards. As credit scores are expected to rise mid-year, keep track of your own score with https://www.annualcreditreport.com/index.action. You might be surprised (in a good way).
What do you think of the bureau’s new standards? Let us know in the comment section below and be sure to subscribe for updates!
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