NO. 3 IN A SERIES: Public records and credit scoring models

By: John Ulzheimer
Date: June 25, 2020

In this issue of The Score, we continue a five-part exploration of the sections of consumer credit reports that have a direct bearing on your credit score, and the relationship between the information they contain and your score. You can (and definitely should) obtain free credit reports once every twelve months at

Reports from the three major credit reporting companies—Equifax, Experian and TransUnion—are formatted differently, but each groups information in similar sections: personal information, accounts activity, public records, and credit inquiries. Although it’s crucial to ensure your personal information is accurate, this series will disregard that issue, as it has no bearing on credit scores. Instead, we’ll consider the other four sections. This installment considers the section on public records. Parts One and Two of the series examined the account activities section of the report. Part Four will look at the public records section, and Part Five will look at the section that lists collections information.

All three of the national credit reporting companies (CRCs)—Equifax, Experian and TransUnion—regularly collect a limited number of public records. The universe of public records, as it pertains to credit reporting, is limited to bankruptcies, judgments and tax liens. The CRCs document these public records in your credit file, which is shared with lenders and other parties with the right to access your credit reports.

And while there are certainly more troubling public records in the public sphere, the three types that can appear in your credit reports are always particularly problematic to credit scoring models. Bankruptcy is legal protection from creditors, which means you’ve likely defaulted on one or more credit obligations. A tax lien allows a taxing authority to forcefully take monies or assets from you to satisfy an outstanding tax obligation. And, a judgment means you have lost a court case and are beholden to a judgment creditor—the winner of the case—for some amount of money. Each of these public records mean something went wrong with or could go wrong with your finances.

Credit scoring systems view the public records that appear on your credit reports as significantly very negative events. As a result, public records have the potential to lower your credit score in a major way.

As with all factors related to credit scores, the exact number of points a public record will shave off a credit score varies from case to case. The impact of the public record on your credit scores will be relative to whatever else is on your credit reports. If you have a pristine credit report, then the impact of, say, a judgment is going to be considerable. If, however, you have a credit report that is already populated with other derogatory entries, then the impact of the public record will be much less substantial, or even nothing at all.

Public records each have their own very different life cycles with respect to credit reporting, which means they persist on your credit reports for different amounts of time. The CRCs can maintain records of a judgment for no more than seven years from the date the judgment was filed.

A tax lien can stay on your credit report indefinitely as long as it remains unpaid, although a CRC may choose to remove it at some point in time. A paid, or released, tax lien must be removed from your credit report within seven years of the release date.

Bankruptcies are more complicated because there are two types of bankruptcies that commonly appear on consumer credit reports:

  • Chapter 7 bankruptcy, which dissolves all legally discharged debts, can remain on a credit file for no more than 10 years from the date the bankruptcy is filed.

  • Chapter 13 bankruptcy, under which some form of payments are made to a bankruptcy trustee, who then pays creditors, can remain for seven years from the date the bankruptcy plan is completed (aka, “discharged”), but for no longer than 10 years.

As these public record events age, their impact on your credit scores lessens. In fact, after a few years it’s not inconceivable that your credit scores could have improved to the point where they’re actually very respectable—assuming, of course, you do not cause other unrelated derogatory events to hit your credit reports. Additional negative events would not only cause your credit scores to remain lower, they would also extend the period of time it would take for your score to recover.