Bad consumer reporting data has had its heyday in the media as of late, and a class-action lawsuit proved this bad data does, in fact, harm consumers. Credit reporting agencies created the National Consumer Assistance Plan (NCAP) to remedy the issue and improve how we all use shared information to determine personal credit. This shift in credit reporting has been a long time coming for many and is here to stay.
Equifax, Experian, and TransUnion created a joint force to implement the NCAP in 2015 to “enhance their ability to collect complete and accurate consumer information and will provide consumers more transparency and a better experience interacting with credit bureaus about their credit reports.”1 At its heart, this new plan will create a uniform reporting standard to remedy the effects of bad credit data.
Implementation began this summer and will take full effect Sept. 15, 2017. Those who furnish consumer data — anyone who extends formal credit — must now provide the following data on any line of credit they open after Sept. 15:2
- Full name — First, middle or middle initial if available, last, and generation code or suffix
- Address
- Full Social Security number — If a full Social Security number is not available, full date of birth in the “mmddyyyy” format is required
- Date of birth in the “mmddyyyy” format
Additionally, lenders must regularly update cases to remain on consumers’ reports, and the minimum frequency of courthouse visits for each case must take place every 90 days under the new plan. Furthermore, after Feb. 1, 2018, the old Metro format will no longer be accepted. This means lenders must begin to implement the new Metro 2 reporting format in the next several months.
NCAP credit forgiveness
NCAP implementation will wipe out previous bad data. Civil judgements, tax liens, and collections that took place before the change that do not meet new NCAP reporting standards will be removed from consumer credit reporting agency databases. Upward of 38 million cases will be forgiven under the new plan.
This is generally accepted as a much-needed change in the industry. It will allow credit professionals to have full, updated pictures of potential borrowers. In general, the tighter reporting standards will provide better information and reduce discrepancies. However, credit lenders should be aware that borrowers’ credit reports may appear less risky than they actually are during the changeover interim, a result of the forgiven transactions. It may take the data some time to catch up to the new system, meaning lenders should remain vigilant.
This change is also designed to ease consumer confusion regarding reporting practices and improve customer interactions with credit reporting agencies. As an added bonus, industry experts agree it will give some consumers small credit boosts because of the millions of cases the NCAP plan will forgive.
1 CDIA. 2016. “Equifax, Experian and TransUnion Launch National Consumer Assistance Plan to Enhance Credit Report Accuracy, Consumer Experience.” Source.
2 Shakespeare, Shelly. 2017. “Understanding your consumer data reporting requirements.” Experian, July 6, 2017. Source.