National Consumer Assistance Plan
The National Consumer Assistance Plan (NCAP) is an initiative launched in 2015 by Equifax, Experian and TransUnion, the three nationwide consumer credit reporting companies (CRAs). The Plan as implemented by the CRAs will make credit reports more accurate as well as make it easier for consumers to understand their credit information and correct errors on their credit reports.
As background, a settlement agreement was reached between the New York Attorney General and the three major credit reporting agencies addressing issues of, among other things, (a) the accuracy of consumer credit information maintained by the CRAs; (b) the CRAs’ practices regarding investigation of consumer complaints of alleged inaccuracies in credit reports; and (c) the reporting of medical debt. As a result of the settlement agreement, the CRAs are implementing changes which will improve credit report accuracy and enhance the dispute resolutions process.
The provisions of the Agreement included phased implementation of Plan policies, practices, and procedures with full implementation expected by March 2018. Some of the Plan’s practices and procedures have already been implemented while some are in progress.
Provisions in the Plan to enhance “Credit Report Accuracy” included:
- Establishing a National Credit Reporting Working Group to review and identify best practices.
- Requiring all data furnishers to use the most current reporting format.
- Eliminating the reporting of debts that did not arise from a contract or agreement by the consumer to pay, such as traffic tickets or fines.
- Prohibiting medical debts from being reported on credit reports until after a 180 day waiting period to allow insurance payments to be applied.
- Removing from credit reports any previously reported medical collections that have been paid or are being paid by insurance.
- Requiring debt collectors to include original creditor information with each account being reported for collection.
- Requiring debt collectors to regularly update the status of unpaid debts and remove debts no longer being pursued for collection.
- Monitoring data furnishers for adherence to the announced reporting requirements and take corrective actions against data furnishers for noncompliance.
Additionally, there were NCAP provisions to enhance “Consumer Experience and Understanding of Their Credit Reports” that included:
- Eliminating any policies requiring that consumers obtain a credit report before filing a dispute.
- Promoting “annualcreditreport.com” on the nationwide credit reporting agencies’ websites.
- Providing special attention to consumers who are the victims of fraud, identity theft, or who have credit information belonging to another consumer on their file.
- Providing consumers who successfully dispute an error on their free annual credit report with the right to request an additional free report without waiting for a year.
- Implementing a process to share death notices received by consumers or their personal representatives across the three credit agencies. Implementing a process to share information across the three credit companies in situations where a data furnisher inaccurately reports a consumer as deceased.
- Providing additional educational content about credit reports and about the dispute process.
- Establishing and completing a media campaign including public service announcements and paid newspaper, radio and television ads which promote consumers’ rights to obtain their free annual credit report and encourage consumers to review their credit reports for accuracy and dispute any errors with the credit reporting agencies.
- Providing additional information in consumers’ dispute response letters about the dispute process, how their disputed accounts changed following their dispute, and what they can do if they are not satisfied with the outcome of their dispute.
- Monitoring data furnishers dispute responses and take corrective actions against data furnishers for noncompliance with their dispute investigation responsibilities.
NCAP Public Records Standards
As of July 1, 2017, the CRAs implemented new NCAP standards for the collection and update of civil judgments and tax liens that apply to new and existing public record data on credit reporting databases.
Public record data collected for credit reporting purposes include bankruptcies, civil judgments, and state and federal tax liens. Public record data must now contain minimum personal identifying information (PII) and be collected at more frequent intervals.
For a PII record to appear on a consumer credit report, public record data will have to comply with these two new NCAP standards:
- The minimum required of consumer identifying information: (1) name, (2) address, and (3) Social Security number and/or date of birth; and
- The minimum frequency of courthouse visits to obtain newly filed and updated public records of at least every 90 days.
Early preliminary data analysis conducted by the CRAs on the effect of the new NCAP standards on current public records reporting projected that the majority of civil judgment public records data would not meet the new standards. A similar analysis of tax lien data suggested that as much as half of the collected data would not meet the enhanced PII requirements. For compliance reasons with terms of the settlement agreement, the CRAs elected to remove all public records which did not meet the minimum PII standards beginning July 1, 2017.
Bankruptcy public record data will not be affected by the PII requirements since bankruptcy records already meet the enhanced standard of minimum personal identifying information.
The CRAs maintain five types of consumer information:
- identifying information such as name, address, Social Security number, and birthdate;
- current and past credit account information, including information about mortgages, car loans, and credit cards;
- public records such as bankruptcies, foreclosures, civil judgments, and tax liens;
- collection accounts (debts that have been turned over to a collection agency); and
- inquiries (requests to access a consumer credit report).
The consumer information is used by creditors to assess the consumer’s credit worthiness.
Consumer debt obligations for judgments and liens can be a decisioning factor by the landlord in qualifying an applicant. Consumer credit data analysis has shown that consumers with judgment and lien records are more likely to default on other debt obligations than would consumers without judgment or lien records.
The NCAP standards may affect a landlord’s credit decisioning for some applicants. With the removal of non-standard public records data from consumer credit reports, it is possible that some consumers will have a positive change in credit score, although CRA analyses show that the changes will have a modest impact on credit scoring. If a landlord or property manager relies solely upon the consumer’s credit report to evaluate the applicant’s credit risk potential, the rental decision could be compromised by the omission of public record data. The removal of non-standard data could create a false positive of a consumer’s lower credit risk. Thus, an applicant could appear more credit-worthy than he really is. The absence of public records data in a consumer credit report should not be taken as an indication there is no public record.
While for some tenants, the new NCAP standards appear to give a more favorable reporting advantage, it cannot change the facts of a civil judgment or tax lien case. The consumer still bears the legal obligation to clear the judgment or lien against him.
It should be made clear however that the removal of public reports for tax liens and civil judgments from consumer credit reports applies only to those public records which do not meet the enhanced NCAP standard of minimum personal identifying information. Tax lien data which meets PII standards will remain a reported public records item in the credit report. As noted above, civil judgments in the majority of cases do not meet the new standards.
Without adequate due diligence in tenant screening landlords and property managers could potentially offer tenancy to a high risk applicant which could result in tenant lease defaults and eviction. A landlord must take every care to reduce claims of negligence in his business operations. A credit report and/or credit score are familiar tenant screening tools. However these are not the only screening tools that a landlord should utilize to qualify applicants to the landlord’s rental standards.
Landlords should carefully review their existing tenant screening policies and practices to ensure they are fully protecting their rental operations through due diligence and risk management measures. Understanding the process of consumer credit reporting and the application of consumer data to his tenant screening standards allows a landlord to make a more informed decision in tenant selection.