topic Re: UCC Affects on Fico Score in Understanding FICO® Scoring

UCC Affects on Fico Score

Anonymous — Tue, 05 May 2020 13:51:02 GMT

Does anyone know how a UCC filing affects your fico score? I'm looking at borrowing from a local company that does not report directly to the credit bureaus but does file a UCC-1. I mean it's an open loan so that is good, but it's also a public records, which normally are bad. I don't want to hurt my credit by going this route. Any experience/guidance?

Re: UCC Affects on Fico Score

Curious_George2 — Tue, 05 May 2020 14:30:21 GMT

"Having a lien filed against collateral doesn’t affect a debtor’s credit score. " Source.

"It won’t affect your credit score itself and is only there to let the business owner and any lenders know that a lien is in place." Source.

"UCC filings do not impair [the] debtor’s credit rating. The filings will appear on the credit report, but simply to provide confirmation that another creditor has a secured position or that you pledged collateral for trade credit." Source.

Re: UCC Affects on Fico Score

Anonymous — Tue, 05 May 2020 17:02:27 GMT

Thank you. Those are all for business credit. Do you know how it affects your personal credit?

Re: UCC Affects on Fico Score

Curious_George2 — Tue, 05 May 2020 17:48:40 GMT

Good point. I dug into it a bit and discovered that only a few select types of public records are shown on consumer credit reports. Traditionally, that section was used to report bankruptcies, tax liens and civil judgments. State attorneys general have pressed the CRA's to verify or remove tax liens and civil judgments (Link), so essentially all that remain are bankruptcies. Link. In other words, financing statements were never reported on consumer credit reports.

That makes intuitive sense to me, because the mere existence of a financing statement is not an indication that the debtor has defaulted on any obligation, and that's really what the public records section of the credit report is about.

In sum, the answer appears to be:

Business -- UCC financing statements are shown on the report but do not affect the score.
Consumer -- UCC financing statements are not shown and do not affect the score.