Phase Two of the National Consumer Assistance Plan is Now in Effect

Phase Two of the credit bureau’s National Consumer Assistance Plan (NCAP) is now in effect! Experian®, Equifax®, and TransUnion® have been slowly rolling out the implementation of these standards in phases, with full implementation expected by March 2018, in the hopes to improve the quality of their public record data. Because of this, industries that depend on credit reports will see a significant change and the multifamily housing industry will need to be prepared.

NCAP’s Phase Two

While it is likely that the bureaus have already implemented parts of these new requirements prior to the effective date, according to TransUnion®’s data reporting initiatives, credit reports will have the following 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.

Depending on which credit scoring model your property uses, phase two can potentially drastically affect the rental market. Prior to NCAP, FICO® utilized medical debt within its credit scoring algorithm. Rental applicants with medical debt might see an increase in their FICO® credit score, spurring an increase in eligible rental applicants now that phase two is effective. If you use VantageScore 3.0®, your property will likely not see a difference in the market, since the scoring model excluded medical debt from their algorithm long before NCAP. Depending on your written rental requirements for medical debt, properties might see an influx of eligible rental applicants. Moving forward, you should consider revisiting your custom decision model.

NCAP’s Phase One Reminder

Announced September of last year, the first phase of NCAP establishes new standards (or personal identifying information) for a record to appear on a consumer credit report. As of July 1, 2017, new and existing public record data will now have had to adhere to these two standards:

  1. The minimum requirement of consumer identifying information: name, address, social security number and/or date of birth.
  2. The minimum frequency (at least every 90 days) of courthouse visits to obtain newly filed and updated public records is required.

Experian®’s preliminary analysis projected that about 96% of civil judgement data and up to 50% of tax lien data will not meet the new standards. However, prior to the effective date of phase one, TransUnion® released a whitepaper that did not state the percentage of civil judgement data that has been affected (only stating that there was “significant change”). They did reveal that a minimum of 60% of tax lien public record data will be removed. You’ll want to rely on a tenant screening service like CIC™ to provide eviction data, as the presence of a civil judgement record (like a monetary eviction) is no longer reflected within the credit score or on the report.

While there has been no new information regarding whether there will be additional phases to the National Consumer Assistance Plan, you can expect that the current changes will make waves within your industry, and possibly your own credit score. Until March 2018, when NCAP is expected to be in full effect, be on the lookout for more updates.

Has NCAP impacted your industry, day-to-day operations, or credit score? Let us know in the comment section below and be sure to subscribe!

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