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Coming Soon: A New Credit Score Boost for Millions of Americans


Coming Soon: A New Credit Score Boost for Millions of Americans

Arguably the biggest change to impact credit reporting (and by extension credit scoring) in decades will be going into effect within just a few months. In July of 2017 the 3 major credit reporting agencies (CRAs) - Equifax, TransUnion, and Experian - have announced that they will remove a significant number of the tax liens and judgments which are currently appearing on consumer credit reports. The pending removal of these derogatory public records could potentially boost credit scores for millions of Americans.

Reasons Behind the Change

There is nothing illegal about a credit reporting agency placing a judgment or a tax lien on your credit reports as long as they comply with the law. Of course if incorrect information is reported (i.e. wrong balance, incorrect dates, a public record which is not yours) that is another story all together.

It is important to understand that the Fair Credit Reporting Act (FCRA) absolutely allows for certain types of accurate public record information to appear on credit reports. Judgments have an FCRA requirement to be removed after 7 years and paid tax liens fall under the same 7 year removal requirement. According to the FCRA unpaid tax liens never have to be removed from credit reports, making them currently one of the most difficult credit problems for a consumer to overcome. However, in July this previously massive credit reporting problem is going to simply vanish from the credit reports of many American consumers.

As already mentioned, there is no FCRA requirement to remove public records such as tax liens or judgments from credit reports unless they have been reporting longer than is legally allowed. What then would prompt such a massive change in credit reporting procedure by Equifax, TransUnion, and Experian? The answer is regulatory concerns.

According to a statement released by the Consumer Data Industry Association (the trade organization of the credit reporting agencies), interim president Eric Ellman attributes the changes in credit reporting procedures as being part of the National Consumer Assistance Plan (NCAP). The NCAP was created after the 2016 settlement between the CRAs and 31 different state attorneys general. (Initially the settlement was reached between the CRAs and the New York Attorney General. You can read more about that first settlement here.)

Per Ellman, as a result of the NCAP the credit reporting agencies " have developed enhanced public record data standards for the collection and timely updating of civil judgments and tax liens." These new standards include a requirement for "a minimum of consumer personal identifying information (PII)" such as a consumer's name, address, social security number and/or date of birth to be verified in order to include public record information on a consumer's credit reports. Additionally, a minimum frequency of courthouse visits (specifically at least every 90 days) to update public record information is required under the NCAP. Most of the tax liens and judgments currently appearing on consumer credit reports do not meet these standards set forth in the NCAP and, as a result, will be removed from credit reports altogether in a few short months.  

What the Change Means for Consumers and Lenders

FICO credit scores, the chief credit score brand currently used by most lenders, are designed to consider public records such as tax liens and judgments whenever a consumer's credit scores are calculated. When the aforementioned public records are present a consumer's credit scores are normally impacted negatively. As a result, when the CRAs remove a public record (or multiple public records) from a consumer's credit reports the consumer's credit scores are almost certain to move upward, perhaps significantly. Translation: up to 12 million Americans could potentially see an immediate increase in their credit scores this summer when the majority of tax liens and judgments are removed from credit reports.

up to 12 million Americans could potentially see an immediate increase in their credit scores this summer when the majority of tax liens and judgments are removed from credit reports.

Lenders are understandably troubled regarding the pending change in credit reporting procedures when it comes to public records. After all, lenders rely heavily upon both credit reports and credit scores to predict the risk of doing business with new applicants. Removing tax liens and judgments from credit reports will lead to credit score increases for many consumers, making it more difficult for lenders to accurately evaluate the credit risk of new prospective customers.

Many consumers, on the other hand, are thrilled by the prospect of the upcoming change which could lead to higher credit scores. Of course it is important for these consumers to remember that the removal of a tax lien or judgment from a consumer's credit reports does not make the issue simply go away.

Consumers applying for a mortgage, for example, will probably not be off the hook when it comes to unresolved tax liens and judgments. Although a tax lien or judgment may no longer be appearing on the applicant's credit reports that does not mean that the items will not show up when the lender performs a public records search of its own. Lender requirements to pay outstanding judgments or tax liens (or at least enter into an acceptable payment plan) are not going to change because the public records may be removed from the credit reports. The removal of these items from credit reports could certainly help to bring about a credit score improvement, but that does not mean a legitimate judgment or tax lien would no longer be owed.


Michelle Black is an author and leading credit expert with a decade and a half of experience, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars across the country. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.


Are Your Student Loans Stopping You from Qualifying for a Mortgage?


Are Your Student Loans Stopping You from Qualifying for a Mortgage?

When you were filling out financial aid applications to help cover your college tuition you probably did not give much thought to how your student loan payments would affect your budget once you graduated. You almost certainly never contemplated how your student loans might impact your credit when you were ready to apply for a mortgage. However, whether you considered the ramifications ahead of time or not, the reality of the matter is that your student loans can sometimes make or break your ability to qualify for a home loan even if your loans have never been paid late or are currently in deferment.

If you are preparing to apply for a mortgage or are already struggling to qualify for a mortgage because of the student loans on your credit reports, the good news is that all hope is not necessarily lost. In fact, depending upon your situation there may even be a few different ways to solve your qualification problems. Take a look...

DTI Problems

Buying a home when you have outstanding student loan debts can certainly be a challenge for multiple reasons. One of the first ways that student loans can make it difficult for you to purchase a home is due to the fact that the amount of these loans will usually be counted against you when you apply for a mortgage. As a result your debt to income ratio (DTI) will increase, causing the amount you qualify to borrow to be reduced. Sometimes these DTI issues can make it impossible to qualify for the home you really want to purchase.  

Student loans may cause you DTI issues even if the loans are currently deferred. (Before you graduate and often for certain periods of time after graduation your student loans may be placed into a deferred status - that is to say that your payments are temporarily placed on hold.) Unfortunately even if you are not currently making a monthly payment on your student loans some portion of the debt still may be counted against your income when you apply for a mortgage loan and the lender calculates your ability to make a house payment.

Potential Solution #1: Consolidation

When you consolidate multiple student loans into a single new loan you can often lower your monthly minimum payment. Assuming that you are eligible to lower your payments through consolidation, consolidating those loans offers you a potential solution to lower your DTI thus enabling you to qualify for a larger loan amount.

Additionally, when you consolidate your student loans your credit scores might even see a small upward bump as well. By consolidating multiple student loans you can reduce your overall number of accounts with balances. Since FICO's credit scoring models pay attention to your number of outstanding debts, consolidating could certainly be a positive move for your credit.

 Credit History Problems

If you have not always made your student loan payments on time you may have another obstacle to try to overcome when you fill out a mortgage application. Unfortunately, if your loan payments are not current then they may put the brakes on you purchasing a new home entirely. Qualifying for a mortgage while your student loans are past due is going to be nearly impossible.

Naturally the easiest way to solve this problem is to pay to bring your loans back to current status if you can afford to do so. However, if your past due student loan debt is too high for you to pay off in one fell swoop, rehabilitation may be an option for you to consider.

Potential Solution #2: Rehabilitation

You may be able to eliminate the default status on your student loans and move those loans from collections back to current on your credit reports by entering into a rehabilitation program. To enter into the loan rehabilitation program you must agree in writing to make 9 consecutive monthly payments (each within 20 days of the due date). The size of your monthly payments will be based upon your income and a variety of other factors.

Once you have completed your rehabilitation payments successfully, your loan should be eligible to be removed from default status and should resume being reported on your credit as a current loan. Unfortunately, any late payments previously made on the loan before the account went into rehab will remain on your credit reports where they may continue to damage your credit scores accordingly for up to 7 years. As a result, during your loan rehabilitation process it would be wise to look into other ways to try to improve your credit - either on your own or with the help of a reputable credit expert.

DIY or Professional Help?

If you like so many millions of other Americans took out student loans to help finance your education then learning the best ways to manage that debt after graduation is a essential to your financial and credit wellbeing. You can try to figure out the best way to manage your loans by yourself or you can work with a pro. Naturally you have the right to try to consolidate or rehabilitate your student loans with your lender completely on your own (just like you have the right to try to repair your own credit or even attempt to perform your own vehicle repairs). However, just like DIY credit repair or auto repair may be an extremely difficult and inadvisable project, so can trying to resolve your student loan issues without professional assistance.

Remember, student loan servicers are supposed to help graduates by making sure that you are well aware of all of the different options you have available. Your loan servicers should be telling you about consolidation options, rehabilitation options, and even loan forgiveness options. However, the truth is that most of the time they do not. (Would a lender really be motivated to help you pay a smaller monthly fee even if the option is available to you?) By hiring a reputable student loan expert to assist you there will be someone on your side, guiding you step by step through finding your best loan repayment, rehabilitation, or forgiveness options and even filling out the paperwork to apply for these programs on your behalf.

CLICK HERE if you would like to have a student loan relief expert reach out to you today. 


Michelle Black is an author and leading credit expert with nearly a decade and a half of experience, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars across the country. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.


Huge Changes Coming to a Credit Bureau Near You


Huge Changes Coming to a Credit Bureau Near You

Consumers can expect to see major changes in the way that the credit reporting agencies - Equifax, TransUnion, and Experian - handle much of the information on their credit reports and the consumer dispute process in the coming months and years. In fact these changes, brought about as part of a settlement agreement released on March 9, 2015, are so sweeping that they have the potential to lead to higher credit scores for millions of US consumers.  

The settlement came about after New York State Attorney General Eric Schneiderman and his office began investigating the practices of the 3 credit reporting agencies in 2012. While the neither Equifax, TransUnion, nor Experian were actually found to have violated any laws, the 3 credit reporting giants have agreed to a settlement which will implement a very significant overhaul affecting many different credit reporting and consumer dispute policies.

Additionally, the changes will not merely apply to residents of the state of New York but rather will be implemented for consumers nationwide. Without question the settlement marks the most significant change in credit reporting since the Fair and Accurate Credit Transactions Act (FACTA) amendment to the Fair Credit Reporting Act (FCRA) in 2003.  In fact, credit reporting changes of the magnitude included in the settlement agreement generally only come about when mandated by federal law.

The lengthy settlement agreement (a whopping 41 pages long of not-so-light reading) details a massive amount of information regarding the credit reporting practices changes to come. Here are some of the most important highlights.

Time Frame

·        The changes detailed in the agreement will not take place overnight; however, they will be implemented nationwide over the next 6 to 39 months (3.25 years).

Medical Collections

·        According to the agreement unpaid medical collections will not be permitted to be added to a consumer's credit reports for a period of 180 days (approximately 6 months). The change is designed to prevent consumers from having unnecessary derogatory collection accounts added to their credit reports in cases where a medical insurance company is simply dragging its feet to pay a bill - a common occurrence.

·        When a medical collection is paid by an insurance company it must be removed from a consumer's credit reports immediately, regardless of how long it has been there. Previously paid medical collections were permitted to remain on a consumer's credit reports, leading to credit score damage, for 7 years from the date of default on the original account.

More Free Credit Reports for Consumers with Disputes

·        Each credit bureau has also agreed to provide an additional free credit report to consumers who file a dispute using an credit report. Previously, as part of 2003's FACTA, consumers were only entitled to only one from credit report every 12 months via the same website.

Changes to the Dispute Process

·        Perhaps the biggest changes to come about as a result of the settlement are among those involved with the consumer dispute process.

¨      Refusing to Process Disputes - The credit bureaus are no longer permitted to refuse to accept a dispute due to the fact that a consumer has not receive a credit report recently nor for the failure of a consumer to include a credit report identification number with his/her dispute.

¨      Deceased Indicator Changes - When a credit bureau receives a dispute from a consumer than an account on his/her credit report is inaccurately reporting that the consumer is deceased (and the credit bureau's investigation has in fact revealed that the consumer's dispute has merit) the credit bureau must share the information regarding the incorrect "deceased indicator" with the other 2 credit bureaus so that they may remove the indicator as well. (These inaccurate deceased indicators often show up on a consumer's credit reports when they hold a joint account with someone who has passed away.)

¨      Review of Supporting Dispute Documentation Submitted by Consumers - Previously if a consumer filed a dispute with documented proof of a credit reporting inaccuracy the credit bureau would still rely upon the data furnisher (i.e. creditor or collection agency) to review the dispute and determine whether to verify or delete the account. Under the new agreement when a consumer includes documentation to support a dispute and the data furnisher verifies the account as accurate anyway the credit bureau will be required to assign an agent to perform its own investigation, independent of the data furnisher. If the credit bureau agent determines that the consumer's dispute is indeed valid then the agent will have the authority to modify or delete the disputed account.

¨      Escalated Dispute Handling - The credit bureaus will be required to process disputes occurring as a result of fraud, identity theft, and mixed credit files (where the files of 2 consumers are merged into 1) in an escalated manner. Escalated disputes will be handled by specialized groups with experience in these complex dispute situations. 


Michelle Black is leading credit expert with over 13 years of experience, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, and  a regularly featured speaker. She is an expert on credit reporting and scoring, budgeting, and identity theft.


What Is the Best Credit Card Option for Someone with Bad Credit?


What Is the Best Credit Card Option for Someone with Bad Credit?

It is important to understand that all plastic is not created equal. Because of this fact many consumers become very confused when trying to choose which type of credit card is best for them. Consumers with no credit or bad credit really only have 3 options to consider when deciding which credit card is best for them: the prepaid debit card, the unsecured subprime credit card, or the secured credit card. Here are a look at the pros and cons of all 3 card types.

Prepaid Debit Cards

When a consumer purchases a prepaid debit card she has the ability to load her own funds directly onto the card. The cards are relatively easy to find - they are available at gas stations, retail stores, and Western Union stores - and literally anyone can purchase them. A consumer does not fill out an application to receive a prepaid debit card, she simply buys it. Once the card is purchased and loaded with funds, it acts just like a gift card. A consumer can use all of the funds available on the card (minus any fees) and then either reload the card or trash it.

Although prepaid debit cards are easy to find and even easier to obtain, there are plenty of reasons to think twice before choosing to use a prepaid card. First, prepaid debit cards do not offer any credit building opportunities for consumers. Why not? The reason prepaid debit cards offer zero credit building opportunities is because prepaid credit cards are not included on credit reports. Ever. Period. If you have heard differently, you have heard wrong. Additionally, prepaid cards do not offer the same fraud protections available through traditional credit card accounts. If a consumer has a prepaid debit card stolen which was loaded with $200 then it is as if she just lost $200 in cash. Finally, although prepaid cards do not offer fraud protection or credit building opportunities, they can still be loaded with fees.

Unsecured Subprime Credit Cards

Another plastic option which is available to consumers with no credit or damaged credit is the unsecured subprime credit card. Unsecured credit cards are the most common type of credit cards. They must be applied for, an approval must be granted, and (if a consumer is approved) a credit limit is assigned to the account. Unlike prepaid debit cards, unsecured subprime credit cards do offer credit building opportunities since they typically report to all 3 of the major credit bureaus each month - Equifax, Trans Union, and Experian. Plus, if a consumer is approved for one of these accounts, she does not have to put down a large deposit in order to secure her new line of credit.

Unfortunately, the primary draw back when it comes to these types of credit cards is the fact that they are usually loaded with high interest rates and incredibly high fees. It is not uncommon for an applicant to be approved for an unsecured subprime credit card only to receive a card which is practically maxed out as soon as it is issued due to all of the initial fees associated with opening the account. CLICK HERE to read more about how high balances on credit card accounts are bad for credit scores.

Secured Credit Cards

The best option for consumers with bad credit or no credit is, without question, the secured credit card. Secured credit cards, like unsecured subprime credit cards, offer great credit building opportunities when managed properly. However, secured cards typically offer this credit building opportunity without the often astronomically high fees associated with unsecured subprime credit cards. They are actual credit cards, unlike prepaid debit cards, which usually report to all 3 credit bureaus.

When a consumer is approved for a secured credit card she is required to make a deposit with the issuing bank which will be equal to the credit limit on the card. For example, if a consumer makes a $300 deposit then she would receive a secured credit card with a limit of $300. The deposit, however, is not the same as loading funds onto a prepaid debit card. If the consumer charges $25 on her secured credit card then she is responsible to pay the funds to the bank as they are not merely deducted from her initial deposit. Secured credit cards also typically offer very easy qualification standards so it is relatively easy to qualify for a secured card even for consumers with no credit or damaged credit.

How to Choose

Regardless of which type of plastic you choose it is important to do your research first. Comparison sites like allow consumers to view the rates and fees associated with multiple cards before they ever apply for an account. 


Michelle Black is an author and a credit expert with over a decade of experience, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, a contributor to the Wealth Section of Fort Mill Magazine, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.