Chapter 2: ACRO Training (Automated Credit Reporting Online)
IN THIS LESSON
What is a public record?
When you check your credit reports, you may notice a section named “public records.”
There are many types of public records, but only a few have historically been included on credit reports. If you’re arrested or get divorced, for example, you don’t have to worry about that information hurting your credit. However, if you file for bankruptcy, that’s another matter entirely.
When a public record appears on your credit report, it’s considered a negative by both lenders and credit scoring models, as these blemishes typically stem from a debt or delinquency. If a public record gets added to your report, there’s a good chance it could damage your credit scores and make it more difficult to qualify for new loans or credit cards in the future.
Why public records are different from other credit report items?
Public records aren’t added to credit reports in the same way as other types of accounts. With most accounts, such as credit cards or auto loans, your lender (the data furnisher) sends information to the credit bureaus when you open an account.
From there, your lender updates your payment and balance history with the credit bureaus on a monthly basis. The credit reporting agencies then updates your credit reports each month with the new data.
It’s worth noting that the credit reporting process is voluntary. No law makes your creditors report information to the credit bureaus. Likewise, no law forces firms like Experian to add information from a creditor to your report. However, both creditors and credit reporting agencies have to obey the Fair Credit Reporting Act (FCRA) if they choose to include any information on your credit reports.
With public records, however, there is no data furnisher sending information about you to the credit bureaus. The IRS, for example, doesn’t send Experian, TransUnion, and Equifax a list of everyone who has a tax lien filed against them. Instead, credit reporting agencies proactively add public record data to credit reports.
Public records, as the name suggests, are available to anyone. By using services like PACER (Public Access to Court Electronic Records), credit bureaus can obtain public record information and add it to their databases.