Impact of excluding public records from credit files

Date: June 28, 2016

How would reducing the amount of public-records data in consumer credit files affect credit-scoring accuracy?

This study has the surprising answers.

The three national credit bureaus, Equifax, Experian and TransUnion, are considering changes to credit-data reporting that would significantly reduce the amount of tax-lien and civil-judgment information found in consumer credit files.

That’s good news for many consumers: The changes emerged from the bureaus’ National Consumer Assistance Plan, a program aimed at enhancing credit-report accuracy and making credit information more transparent and user-friendly for consumers. But the potential changes present a challenge to developers of credit scoring models: They reduce the amount of data scoring models can use to predict consumers’ likelihood of defaulting on their loans.

To understand how these changes could affect scoring-model accuracy, VantageScore simulated the most extreme form these changes could take—elimination from credit files of all civil-judgment and tax-lien credit file data—and examined the results on scores for four million U.S. consumers as generated by the VantageScore 3.0 model.

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