If your credit score jumped 20-40 points last summer, you may see another boost in May as the credit reporting agencies finish changes to remove incomplete identifying information from credit reports.

On April 16, the credit reporting agencies Equifax, Experian and TransUnion implemented the final changes to a plan it agreed to and started in mid-2017 to remove tax liens and civil judgments from credit reports. Without such information to hurt their credit reports, some consumers could start seeing their credit scores rise in May, just as they did last summer when the first half of the changes were implemented.

The agencies are completely removing tax liens from credit reports beginning in April. The change was made because incorrect information was sometimes put on a credit report of someone who didn’t have a tax lien, but had a name similar to someone who does.

For example, a Fred Adams Smith who has never had a tax lien could see one listed on their credit report for a Fred Adam Smith who did have such an unpaid debt.

The new rules go further, removing tax liens and other civil public records including bankruptcies and civil judgments, unless they have at least three of four data points: a person’s name, address, Social Security number and date of birth. Having more identifying information is meant to make any reported civil public records on credit reports more accurate.

The change could also remove legitimate liens or judgments from a credit report because many liens and most judgments don’t include all three or four identifying data points.

The credit agencies have also agreed to require that information on credit reports be updated at least every 90 days on tax liens and judgments from public court records. If not, they’ll be removed from the reports.

Why the changes?

The changes are happening partly due to consumer complaints filed against the three credit reporting agencies for allowing inaccurate information in credit reports, along with difficulty getting it corrected.

The Consumer Financial Protection Bureau, or CFPB, required the reporting changes after finding a need for better identity-matching criteria and updating records more frequently.

Tax liens, for example, may not have been checked every 90 days simply because of a lack of manpower at the credit agencies.

Civil judgments, such as from a debt collector taking a debtor to court, may not have a Social Security number on them and it’s unusual for a judgment to have a date of birth listed. Not having both of those will automatically remove a judgment from a credit report under the new policies, even if everything else is accurate.

If consumers want to make sure that paid tax liens or anything else that will help their credit score is accurately listed on their credit report, they should check their reports themselves.

Effects on credit scores

About 5.5 million credit reports are expected to be impacted by removing the remaining tax lien data.

LexisNexis Risk Solutions, which provides public record information to the credit bureaus, estimates that a credit score could improve by up to 30 points when tax lien data is removed.

For people with a tax lien or civil judgment on their credit report, they could see a big enough jump to help them get approved for a credit card or auto loan, among other things.

Inaccurate, negative information on a credit report can prevent someone from getting a job or being unable to rent an apartment. It can also cause them to be denied a credit card, or to be charged a higher interest rate than someone with good credit.

When the new plan was implemented, the CFPB found that all civil judgments and about half of the tax liens on consumer credit reports were removed. The number of bankruptcies reported remained virtually unchanged. The removals left about 1.4 percent of consumers with a tax lien on their credit report.

About 4 percent of consumers with civil judgments or tax liens on their credit record in June 2017 saw a large enough increase in their credit score to move them into a higher credit band, the CFPB found. For example, their credit score moved from being subprime to near prime, or from near prime to prime.

There could also be minimal or no impact to credit scores from the changes, especially to people with strong credit. Consumers with weak credit could see the most impact.

Some credit may look better than it is

While tax liens and other civil records may disappear from credit reports, the people with poor credit may still be a poor credit risk.

Consumers with liens or judgments are twice as likely to default on loan payments, according to LexisNexis.

While the changes will help many people with incorrect liens or judgments, removing correct tax liens that don’t meet the new identifying requirements could lead to better credit scores for people who don’t otherwise it. They could get a higher credit score than they should have, which could lead to them qualifying for a loan they can’t afford and still post a higher credit risk.

That could help lenders get more customers, but ultimately could cost them more in unpaid loans. Rental property owners would have difficulty evaluating applicants.

To mitigate such risks, lenders may charge borrowers more and may have to go to the courthouse themselves to check public records.

Mortgage lenders, not credit card providers or auto loans, are most likely to have extensive public records searches because home loans are so large.

Older negative data has less impact

An older lien or other negative information on a credit report can hurt a credit score much less than a newer problem.

Late payments can hurt a credit score more than tax liens or judgments. The older a lien or judgment is, or anything else derogatory on a credit report, the less it will affect a credit score.

And the higher the credit score to begin with, the more affect derogatory information will have on it.

Data from FICO shows that for a consumer with a 680 FICO score, being 30 days late paying a mortgage bill will drop their score by up to 80 points and will take nine months to fully recover. Someone with a 780 credit score could have their score drop by up to 110 points and it will take three years to recover.

Along with paying off tax liens and paying their bills on time, consumers should check their credit reports for errors and get them fixed. If someone with a similar name but different birthday is listed on your credit report, for example, that’s information you want to correct.