A derogatory public record on your credit report is a negative government or court record — a bankruptcy, foreclosure, tax lien, or civil judgment — that a credit bureau has pulled into your consumer file. In practice, though, only one of those four still lands on credit reports from Equifax, Experian, and TransUnion: bankruptcy. Civil judgments were removed in 2017, and the last tax liens came off in April 2018.1Consumer Financial Protection Bureau. Removal of Public Records Has Little Effect on Consumers’ Credit Scores The records themselves still exist in courthouses and government databases, and they can still surface in other places that matter, but the standard credit report is no longer one of them for most of these items.
The Four Types of Records People Mean
Four categories account for almost everything called a derogatory public record in a financial context.
A bankruptcy is a case filed in federal bankruptcy court. The filing itself opens the case and constitutes an order for relief under whichever chapter you file, and the court’s records are permanent and public.
A foreclosure is a lender’s action to force the sale of the property securing a mortgage. Depending on the state, it moves through the courts or through a notice-only process outside court.2Consumer Financial Protection Bureau. How Does Foreclosure Work Either way, documents get recorded with local government, creating a public record tied to the property and the borrower.
A federal tax lien arises automatically once the IRS assesses a tax, demands payment, and you fail to pay.3Office of the Law Revision Counsel. 26 U.S. Code 6321 – Lien for Taxes To protect its claim against other creditors and buyers, the IRS files a Notice of Federal Tax Lien with the office designated by state law, usually at the county level.4Office of the Law Revision Counsel. 26 U.S. Code 6323 – Validity and Priority Against Certain Persons That filed notice is the public record. State and local governments can file their own liens for unpaid state or property taxes.
A civil judgment is a court order resolving a lawsuit, usually with one party ordered to pay the other. The clerk enters it in the court’s civil docket, and it becomes searchable to anyone.5Legal Information Institute. Federal Rules of Civil Procedure Rule 58 – Entering Judgment Debt collection suits, personal injury verdicts, and breach-of-contract awards are the common examples.
What Actually Shows Up on Your Credit Report
Before mid-2017, all four types routinely appeared on consumer credit reports and dragged down credit scores. That changed under the National Consumer Assistance Plan, a settlement between the three major bureaus and more than 30 state attorneys general.
Starting July 1, 2017, any civil public record had to include the consumer’s name, address, and either a Social Security number or a date of birth before a bureau could report it. Court records almost never contain Social Security numbers, so nearly every civil judgment came off immediately. About half of tax liens also failed the new standard, and by April 2018 the bureaus had removed the rest.1Consumer Financial Protection Bureau. Removal of Public Records Has Little Effect on Consumers’ Credit Scores
Before the changes, about 6 percent of consumers had a civil judgment or tax lien on their credit file. That dropped to 1.4 percent (all tax liens) after the first phase, and eventually to zero for both categories.1Consumer Financial Protection Bureau. Removal of Public Records Has Little Effect on Consumers’ Credit Scores Bankruptcy is now the only derogatory public record that still routinely appears on reports from the three major bureaus.
Foreclosure is a boundary case worth calling out: the foreclosure itself is a public record at the county level, but what appears on your credit report is the mortgage tradeline showing the loan’s status, not the recorded foreclosure document.
How Long a Bankruptcy Stays
The Fair Credit Reporting Act lets a credit bureau report a bankruptcy for up to 10 years from the date of the order for relief.6Office of the Law Revision Counsel. 15 U.S. Code 1681c – Requirements Relating to Information Contained in Consumer Reports The same statute caps civil suits, civil judgments, and paid tax liens at seven years, though those items no longer appear on standard credit reports in the first place.
Where These Records Still Reach You
Removal from the three major credit reports did not delete the underlying records. They still sit in court and government databases, and specialty screening reports still pull them.
Renting
Tenant screening reports can include civil lawsuit records for seven years, bankruptcy filings for 10 years, and eviction court filings for up to seven years from the filing date — even if the tenant was never actually evicted.7Federal Trade Commission. Disputing Errors on Your Tenant Background Check Report A record in that report can produce a rejected application, a larger security deposit, a co-signer requirement, or higher rent. If a landlord turns you down based on the report, they must send you an adverse action notice identifying the screening company and explaining how to get a free copy.
Buying a Home After Bankruptcy
Waiting periods are the rule. For FHA-insured mortgages, a Chapter 7 bankruptcy generally requires at least two years from the discharge date. If you can show the bankruptcy was caused by circumstances beyond your control, that window can shrink to 12 months. For a Chapter 13 bankruptcy, you may be eligible after 12 months of on-time payments under the repayment plan, with written permission from the bankruptcy court.8U.S. Department of Housing and Urban Development. How Does a Bankruptcy Affect a Borrower’s Eligibility for an FHA Mortgage Conventional loans through Fannie Mae and Freddie Mac tend to require longer waits, often four years after a Chapter 7 discharge and two years after Chapter 13.
Employment
Some employers check public records during hiring, especially for jobs with financial responsibility or a security clearance. A company using a screening report with public record information for employment purposes must either notify you that public record information is being reported or maintain procedures to ensure the data is complete and current.9Federal Trade Commission. What Employment Background Screening Companies Need to Know About the Fair Credit Reporting Act
Checking Your Credit File and Disputing Errors
Pull your reports first. You can get free weekly credit reports from all three bureaus at AnnualCreditReport.com.10AnnualCreditReport.com. Review Your Credit Report Given the NCAP changes, you should not see tax liens or civil judgments. A bankruptcy within the 10-year window will still show.
If something is wrong — a vacated judgment still listed on a screening report, a tax lien belonging to someone with a similar name, a bankruptcy with the wrong dates — federal law gives you a dispute right. Under the Fair Credit Reporting Act, once you notify a credit bureau that information in your file is inaccurate, the bureau must conduct a free investigation and correct or delete the item within 30 days.11Office of the Law Revision Counsel. 15 U.S. Code 1681i – Procedure in Case of Disputed Accuracy If the bureau cannot verify the item, it must come off. Both the bureau and the furnisher have to fix errors at no cost to you.12Federal Trade Commission. Disputing Errors on Your Credit Reports
The same rights apply to tenant screening and other specialty consumer reports. File your dispute in writing with the screening company, include supporting documents (a court order vacating the judgment, for example), and keep copies of everything. The company has to investigate and respond inside the same 30-day window.
Clearing a Federal Tax Lien From Public View
If a federal tax lien still shows up when someone searches public records against your name, the distinction between a release and a withdrawal matters. A release means the IRS removes the lien from your property after the debt is paid in full, but the record of the filing may still be visible in public databases. A withdrawal removes the public Notice of Federal Tax Lien entirely, as if it had never been filed, though it does not eliminate the underlying tax debt.13Internal Revenue Service. Understanding a Federal Tax Lien
Under the IRS Fresh Start initiative, you may qualify for a withdrawal if you owe $25,000 or less and enter a Direct Debit Installment Agreement. After three consecutive on-time payments, you can request the withdrawal. That is worth pursuing when a lien has satisfied but still shadows you in public records: a release marks the lien as paid, but a withdrawal cleanses the public record.