With September 15th just around the corner, you’ll want to prepare your staff for the next phase of the three credit bureau’s National Consumer Assistance Plan (NCAP). Aiming to improve the quality of their public record data, Experian®, Equifax®, and TransUnion® have been slowly rolling out the implementation of these standards in phases, with full implementation expected by March 2018.
What’s Changing in Phase Two?
While it is likely that the bureaus have already implemented parts of the new requirement, according to TransUnion®’s data reporting initiatives, phase 2 will be fully effective around September 15th, 2017 with the following data reporting changes:
- Do not report medical debt collection accounts less than 180 days old. This is required for collection agencies and debt buyers.
- Report a “delete” for accounts that are being paid or were paid in full through insurance. This is required for collection agencies and debt buyers.
- Report full date of birth for new authorized users on all accounts. This is required for reporters of authorized user data.
Brace for Some Rental Market Changes
Phase two has the potential to drastically affect the rental market, depending on which credit scoring model your property uses. Prior to NCAP, FICO® utilized medical debt within its credit scoring algorithm. Once phase 2 goes into effect, rental applicants with medical debt might see an increase in their FICO® credit score, spurring an increase in eligible rental applicants. Properties that utilize VantageScore 3.0® will not see an increase, since the scoring model excluded medical debt from their algorithm long before NCAP. Regardless, you will not see any medical debt that is less than 180 days old, or will be paid in full by an insurance provider, on your credit reports. Depending on your property’s written rental requirements for medical debt, you might see an influx of eligible rental applicants, and should consider revisiting your setup if you use a custom decision model.
In Case you Missed Phase One…
Be aware that phase one has already been implemented, with the new standards requiring a consumer’s name, address, SSN and date of birth to be on all civil judgement and tax lien data. Experian® projected in their preliminary analysis that about 96% of civil judgement data and up to 50% of tax lien data will not meet the new standards. Prior to the effective date of phase one, TransUnion® released a whitepaper that only stated that there was “significant change” to civil judgment data and a minimum of 60% of tax lien public record data will be removed. You’ll want to rely on a tenant screening service like ApplyConnect® to provide eviction data, as the presence of a civil judgment record (like a monetary eviction) is no longer reflected within the credit score.
While these changes feel small, it’s important to understand how each and every phase affects you, your applicant, and the rental market. If you utilize tenant screening to make informed rental decisions, NCAP can drastically change the credit reports you rely on. Stay on the lookout for September 15th, when phase 2 rolls out, and keep your eyes peeled for phase 3.