Breaking down different sections of your credit report, you may have wondered what the public records section means. After all, most people think that financial decisions are private agreements- how can anything from them get into your public record?
What Are Public Records
It is important to understand what public records are. Broadly, public records include any of the information, in any format, that are created by, used by, or maintained by the government in the course of business. They include a wide range of different types of information, from the minutes of public meetings to birth certificates. Most of these types of public records have no relationship to one’s credit, but some types of public records are believed to reflect your creditworthiness and will make their way onto your credit report.
There are three types of public records that might show up on your credit report. They are civil judgments, tax liens, and bankruptcies. However, while some of these may continue to appear on your credit report, newer credit reporting rules that were outlined in the National Consumer Assistance Plan in 2017 restricts how credit bureaus can report tax liens and civil judgments, but do not really impact the reporting of bankruptcies under the public record section of your credit report.
A tax lien occurs when a person fails to pay property. While it is a debt, it is a certain type of debt and it is often linked to the property in question. For example, a person may have a tax lien on a piece of property that would require payment of that lien if the property was sold.
Civil judgments including any legal judgments that require a party to pay money (damages) to another party. Civil judgments could be based on failure to pay other debts, but they could also be based on non-monetary disputes that were reduced to monetary damages.
Finally, bankruptcies, which can still appear on your credit report, refer to a very specific type of legal judgment. In a bankruptcy, a debtor who is unable to meet all of their payment obligations asks the court to restructure or forgive their debts.
Because of the change in law, any tax liens or judgments that were reported based on public records that failed to contain a person’s name, address, and either the social security number or date of birth, were considered unreliable and should be removed. In addition, credit bureaus were given the responsibility of checking their records for accuracy regularly, and failure to comply with the checks could result in the removal of that type of information, even without the information being erroneous. This has led to millions of people having these types of negative public records removed from their credit reports.