For a few Vashon mortgage applicants, next week may see a one-time favorable change in how
they are viewed by home loan lending institutions. It’s a technical change that could amount to a
significant difference in the results they get when they apply for Vashon home loans.
The first evidence of what the Washington Post calls “a surprise boost” will be triggered on
Saturday, which marks the July 1 beginning of a changeover in the information gathered by the three
national credit bureaus. Equifax, Experian, and TransUnion have been working with a number of states to
handle an awkward technical problem: many states have outmoded computer reporting systems that result
in “troubling error rates” in official public records.
Translation: they’re frequently outdated, scrambled, missing identity information—just plain
The data in question—tax liens and monetary damages from civil court judgments—has too often
been the basis for depressed credit scores for unfortunate home loan applicants. And because some
governmental agencies can be excruciatingly slow to respond to requests for corrections, when time is a
factor (as it often is) those mistakes can be decisive. For any Vashon home loan applicant whose own
credit score has suffered, it’s not an abstract problem.
As part of an initiative by the credit bureaus to increase the accuracy of their scoring, beginning in
July they will purge the dubious information from their files and stop collecting it altogether. FICO
estimates that between 12 and 14 million U.S. consumers have tax liens or judgments in their current
files: they can expect an abrupt jump in their scores. Consumers with no other negatives in their files
could see their FICO scores instantly jump by 40 points or more. The result could be better home loan
offer terms as well as lower interest rates.
Inevitably, there is a downside. Those with legitimate judgments and tax liens against them will
also show elevated scores, which could be misleading to loan companies and landlords who rely on the
numbers to make informed risk evaluations. The size of the problem is expected to be limited, though,
since most people with judgments and liens have other negatives in their files.
In case you are uncertain whether your own credit score might be affected, that probably means it’s
been a while since you checked...and that’s never a good thing! Keeping on top of your credit reputation
is certain to pay off in the long run, especially when the time comes to begin looking for your next
Vashon home—which is also when you’ll want to give me a call!