Credit Reporting Changes And The Impact On YOU (the consumer)

Credit reports are essential to everyday life for Americans, because they directly affect one’s credit score which in turn affects one’s ability to obtain a mortgage, student loan, business loan, insurance, and even the associated interest to accrue. Unfortunately for millions of Americans, credit reports can be frustrating when an error occurs and you attempt to dispute the error with the credit bureau. Primarily, because previously the credit bureau did little to independently verify the error associated with the account and would take the furnisher’s word over the consumer’s.

However, the Nation’s three largest credit reporting agencies, Experian, Equifax, and TransUnion are making drastic changes to how they report consumer data, to how they handle consumer data disputes.  The three major changes that consumers should note are (1) the credit bureaus have to hire and train employees in reviewing consumer documents regarding an error in their credit report, which may require an independent investigation; (2) requires the credit reporting agencies to wait 180 days before adding any medical debt to a consumer file; and (3) once an insurance company pays a medical debt, it must be removed from the consumers account.

These changes arise from a settlement agreement the credit reporting agencies entered into with the New York Attorney General on March 8, 2015.  Several other State Attorney Generals brought suit against these credit reporting agencies claiming they knowingly included error-riddled data in consumer credit files.  Even though, the credit reporting agencies only entered into the settlement with the New York Attorney General, the planned changes are to be implemented nationwide in three phases.

The first phase of changes will take effect September 8, 2015, and these include:

  • Credit bureaus cannot refuse to accept a dispute from a consumer because the consumer has not recently obtained a copy of their own credit report;
  • Credit bureaus cannot create the impression that the consumer must first obtain a copy of their own report before filing a dispute;
  • Credit bureaus will implement processes to identify and then process consumer disputes that warrant escalated handling; and
  • other administrative changes.

The second phase of changes will take effect September 8, 2016, and include:

  • How collection agencies report data to the credit bureaus, collectors need to include the original creditor and the creditor’s business;
  • Any collection that does not stem from a contract or an agreement to repay will be systemically removed from the credit bureau’s databases;
  • Currently consumers have access to one free credit report from each credit bureau per year, this will increase to two free credit reports per credit bureau per year in order to verify that a dispute has been corrected;
  • Along with other administrative changes.

The third and final phase of changes stemming from the settlement agreement will take effect June 8, 2018, and include:

  • Requiring collection agencies to reconcile collections that have not been paid in full;
  • Fully retiring the old Metro 1 credit reporting format and implementing Metro 2, and only accepting information from companies using Metro 2 credit reporting format;
  • Credit bureaus waiting 180 days after the medical debt first went delinquent before reporting any medical collections;
  • Removing and suppressing all medical collections that have been paid or being paid by insurance;
  • Providing consumers notice after credit bureaus complete an investigation pursuant to the consumer’s dispute, the notice shall contain (i) the actions taken by the credit bureau regarding the dispute; (ii) contact information of the creditor/collector; (iii) results of the dispute if any modification or deletion of disputed item; and (iv) consumer’s options if not satisfied with investigation results, including the right to re-dispute the item with supporting documents.

These changes will drastically improve how consumers receive their credit reports and how information is actually reported on their reports, which will only improve the reports’ accuracy.  These changes will also benefit the credit bureaus by having more accurate consumer reports along with an easier way for consumers to dispute errors in their report – fewer consumers will file actions against the credit bureaus for inaccurate credit reports.

The lawyers at Camden & Meridew, P.C. are experienced in the areas of tax law, family law, litigation, consumer law, criminal law, and bankruptcy. Learn more by calling Corey Meridew at 317-770-0000 or completing our online contact form today.

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