On July 1, 2017, the big three credit bureaus changed the way credit scores are computed by eliminating important information from credit reports. Under the National Consumer Assistance Plan(NCAP), involuntary liens for unpaid state and federal taxes, outstanding court-ordered monetary damages, past-due child support, foreclosures, evictions, and other unpaid financial obligations will no longer appear in credit files – and no longer be figured into credit scores if minimum personal identifying information requirements aren’t met.
How the NCAP Could Negatively Impact Lenders:
* About 11% of American adults have adverse liens against them as a result of failure to pay money they owe.
* Credit scores for hundreds of thousands of people with adverse liens may go up, giving the impression these individuals are a lower credit risk than they are.
* Business rules and standard processes may not identify these high risk borrowers.
* People with adverse liens tend to avoid lenders. Pent-up demand within this segment could generate a surge in applications.
Source: Black Knight Data & Analytics. ( Black Knight has a program that identifies homeowners with unpaid liens. contact: dataanalyticsinfo@bkfs.com, 866-964-8343).