Credit reports have evolved over the years. The most significant changes occurred almost five years ago on July 1, 2017, when all three credit bureaus – Equifax, Experian and TransUnion – settled a lawsuit that was filed against them by the attorney generals of several states. Their legal settlement resulted in the removal of all tax liens and civil judgments from the credit reports furnished by the three credit bureaus.
It may be surprising, but here we are virtually five years later, and many users of credit reports – corporations, municipalities, apartments, franchise companies, and country clubs – who rely upon information regarding tax liens and civil judgments, still mistakenly believe that credit reports provide them with this critical data. However, credit reports no longer include tax liens and civil judgments. The good news is that the lawsuit settlement only affected the three credit bureaus. There are some consumer reporting agencies (CRAs), other than the three credit bureaus, which have alternative sources for providing this important information.
For the multi-family housing and property management industries, vital eviction and rental judgment data can be obtained by adding a separate option, typically a National Eviction or Rental Judgment Search. This is not available on the credit bureaus’ credit reports, but some CRAs offer it as an ancillary service to augment what the credit bureaus can no longer disclose on their credit reports.
For businesses that are concerned with tax liens and civil judgments, there are CRAs with an alternate source for this crucial data. A typical product is called a Bankruptcy, Lien and Judgment Search. However, companies must seek CRAs that offer this service, and then also request this supplemental product to boost what credit reports no longer have (i.e., tax liens and civil judgments).
One positive enhancement to credit reports is that certain permissible business purposes for obtaining a credit report can now be a “soft-pull” option. “Soft-pull” means that the credit inquiry has no impact on the consumer’s credit score. Tenant screening has “soft-pull” credit available. Also, franchisee screening, board of director screening and country club membership screening also have “soft-pull” credit options. However, not all CRAs are authorized for “soft-pull” tenant screening, franchisee screening, board of director screening and country club membership screening, so be sure to select a CRA that is permitted to provide these consumer-friendly “soft-pull” credit services.
One last point. Today, more and more individuals are freezing their credit files for security purposes. The problem is these individuals forget to unfreeze their credit file when they go to your company for whatever permissible purpose – such as renting an apartment, buying a franchise, joining a country club, or joining your board of directors. Companies and organizations that plan on obtaining a consumer’s credit report need to remind their applicants to remove the security block on their credit file for your company/organization and the consumer reporting agency that are being authorized to obtain their credit file. This will save time and money for your company/organization, by getting the background check report processed most expeditiously.
Posted by: Rudy Troisi, L.P.I., President and CEO, Reliable Background Screening
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