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What Credit Reports No Longer Say

Resident Screening
June 2018

Changes to the National Consumer Assistance Plan necessitate housing professionals looking elsewhere for credit data.

Since the three major credit bureaus rolled out their National Consumer Assistance Plan (NCAP), the credit reports that rental housing professionals rely on have changed drastically. With most civil judgment and all tax lien data removed from credit reports, rental properties are searching for a supplementary data source to uphold their standards.

Following the first phase NCAP on July 1, 2017, all new and existing public record data must meet two criteria to appear on the credit report:

  1. The record must have the applicant’s complete name, address and social security number or date of birth.
  2. The data furnisher must visit the courthouse at least every 90 days to obtain newly filed and updated records.

Ninety-six percent of all civil judgment data did not meet the new standards and therefore was removed in 2017. The first NCAP phase removed about 50 percent of tax lien data; however, as of April 2018, all tax lien data has been removed.

Experian, for example, has removed all civil action judgment data from its files. The only public record data it currently has is bankruptcy. All civil action and tax lien data have been removed from credit reports.

While thankfully, according to the CFPB’s 2018 report, these changes only impact 6 percent of consumers’ credit scores, this does not diminish the fact that the civil judgment and tax lien data that properties rely on is no longer accessible.

Peter Fitton, Product Manager at CreditXpert, closely followed the NCAP transition and its effects to credit reports. “Last year we ran a predictive study on the impacts these changes would have on credit scores and found that most of the scores changed very little, especially for applicants who already had poor credit. The largest business impact of these changes comes down to how a company uses credit report information in making a determination about an applicant.”

“If public records on credit reports have been a determining factor in the rental decision, then that information will need to come from a different source in order to ensure applicants meet the rental requirements,” Fitton says, “That was a best practice anyway, since many relevant public records did not appear on credit bureau reports even before the NCAP changes.”

Amongst the 96 percent of civil judgment data that has been removed, monetary evictions are included. Property managers and independent rental owners who depended on the credit report to show if an applicant had a monetary eviction (or tax lien) will no longer have access to that information through the credit report alone. To properly vet each rental applicant to their property’s standards, Thelma Parivar, Comptroller at Stanley Sirott, supplements these data gaps with an additional background check report.

“When the first phase of NCAP went into effect, it removed a significant amount of helpful information that we use when reviewing potential residents,” Parivar says, “The elimination of monetary judgments makes an impact on the decision process, as they indicate that an eviction has occurred. We’ve added CIC’s eviction report to our background checks to combat this.”

Although the big three credit bureaus originally planned on the NCAP changes to be fully implemented by March 2018, this does not stop them from making additional adjustments to the data they use for credit reports in the future. While these changes might seem insignificant when only analyzing a rental applicant’s credit score, for properties that rely on this data alone (specifically to analyze if an eviction has taken place), it can result in the acceptance of a rental applicant that does not meet their standards.