Here's why your credit score might increase on July 1

All civil judgments and at least 60 percent of tax liens will be removed from U.S. credit reports on Saturday, July 1, as a result of policy changes from the three major credit bureaus: Equifax, Experian and TransUnion.

Estimates from the two leading credit-score providers – VantageScore and FICO – indicate that the changes will benefit roughly 12 to 20 million people, resulting in a credit-score increase of up to 20 points.

So if you have either or both of these items on your credit reports, a potentially money-saving surprise could be headed your way. Here are the definitions of both items:

  • Civil Judgment: Order from a judge to pay money owed after losing a lawsuit.

  • Tax Lien: Prevents you from selling property, such as a house or car, before satisfying unpaid tax obligation.

These changes are part of a broader effort by the credit bureaus to correct their notoriously high error rate through improvements to their so-called "matching logic." That's just a fancy way of referring to how they assign information to the right people's credit reports. And there clearly are significant problems with the documentation available for most, if not all, civil judgments and tax liens.

As a result, millions of Americans may have unfairly endured credit-score damage, making it harder for them to borrow and more expensive to do so. Corporate policy and consumer injustice aside, however, most people will only want to know one thing: How this will impact their credit scores.

[See: 12 Simple Ways to Raise Your Credit Score.]

How much will my credit score improve? The most accurate answer is to simply wait and see. You can get free credit scores from a variety of sources, including WalletHub, which provides daily updates. But the two leading credit-score providers did run some projections on the expected impact. Here's what they found:

  • VantageScore: Representatives for this scoring model predict a 10-point increase, on average.

  • FICO Score: These scores will see an increase of 20 points or less, in most cases.

In other words, these new credit report changes probably won't bring your credit score from bad to excellent overnight. In fact, the average American (whose credit score is 669, according to WalletHub data) has just a 4 percent chance of seeing improvement, according to VantageScore. People with scores from 351 to 500, on the other hand, have the best chances: 30 percent and up.

But every bit of positive information added to your credit report and every negative record removed from it matters. So this is definitely a positive development for consumers.

[See: What to Do If You've Fallen (Way) Behind on Your Credit Card Payments.]

It does make you wonder, though, if they have such flawed info about judgments and liens ...

What else are credit bureaus getting wrong? That's difficult to say, as the most definitive research on the matter is rather old. In 2013, the Federal Trade Commission found that 1 in 4 consumers had an error on at least one of their major credit reports.

[See: 12 Habits to Help You Take Control of Your Credit.]

So it's safe to say that these changes alone won't eradicate credit-report errors. And that means ...

We've still got work to do. You shouldn't be content with seeing flawed judgments and liens fall off your credit report. Rather, you should continue (or start) reviewing the accuracy of your credit reports on a regular basis to make sure nothing else crops up. You can get a free copy of each major credit report once every 12 months from And you can supplement that with more frequent updates from other free services.

The credit bureaus' work isn't done yet, either. In the coming months, they plan to:

  1. Stop reporting medical collections accounts that are less than 180 days old.

  2. Remove collections accounts paid through insurance.

  3. Begin requiring a full date of birth for all new authorized users on credit card accounts.

  4. Require a minimum amount of personally identifying information for all credit-report records.

As long as you pair these improvements with on-time bill payments and other financially responsible habits, there are definitely brighter days ahead for your credit score.

Copyright 2017 U.S. News & World Report