Impact to Your Tenant Screening

The National Consumer Assistance Plan (NCAP) has now been in effect for about a month.  Many of you have heard me speak about the NCAP changes —  they are ongoing and mostly for the positive.

At the core, the NCAP is about the three major credit bureaus taking measured steps to improve quality and accuracy.  All new and existing public record data used by Experian®, Equifax®, and TransUnion® will be held to the new NCAP standards – so this effectively impacts everyone performing tenant screening.

What is the National Consumer Assistance Plan (NCAP)?

Announced September of last year, NCAP establishes new standards regarding personal identifying information (PII).  The implementation of these standards will occur over a three year period, with full implementation expected by March 2018.

Now, for a PII record to appear on a consumer credit report, public record data will have to adhere to these two standards:

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

What Does this Mean for You & Your Tenant Screening?

The impact varies by public record data type.

Bankruptcy Data

The bureaus essentially anticipate no change to bankruptcy public record data, because bankruptcies are typically filed with the minimum consumer ID information like SSN, passing requirement #1 above.

Evictions, Civil Judgments, and Tax Liens

You will notice some changes here.  While estimates vary by bureau, all anticipate a noticeable change in what will be reported on the credit section of a background report.

• Eviction-related civil judgments will be reported less on the credit report itself – by some bureau estimates this reporting may decline by over 50%.  Instead, if eviction data is important to you (and it should be), be sure to specifically order eviction data
• Approximately half of tax lien data will no longer be available on credit reports

Basically, be sure to order eviction data and rely less on a basic credit report as your means of tenant screening.

Feel free to reach out to us and/or your screening provider if you want more details.  If you are already ordering eviction data and performing solid, comprehensive screening, including employment and landlord verifications – you may not notice or need any changes.

The Good

While the full effect of these changes will take a little time to adjust to, remember that these changes bring positive change.  NCAP is improving the accuracy of reporting of consumer PII:

• Medical debts won’t be reported until after a 180-day waiting period to allow insurance payment to be applied”. As most people don’t necessarily ‘request’ medical debt, giving applicants, and insurance providers, a few months to pay their bills before the debt is applied to their credit score is reasonable
• Consumers who obtain their annual free credit report and dispute information on it will also be able to obtain a second free credit report without having to wait another 12 months.
• Fewer false positives and stale data — Screening applicants with common names will be more accurate thanks to the data requirements above, and only data that is routinely refreshed will be reported.  All this leads to more accuracy.

In Closing

Look for these changes and feel free to reach out if you have any questions.  While it may seem frustrating to be sure you order eviction data, it is good practice, and you will experience other positive changes both as a real estate investor, and as a consumer.