Consumers Score with Credit Reporting Overhaul

Consumers will see certain negative information that can impact their scores, such as medical debts, tax liens, civil judgments and collection accounts, scrubbed from their credit reports if the nation’s credit reporting agencies can’t comply with more stringent reporting rules that must be fully implemented by June 2018.

The credit reporting overhaul – which also address the handling of disputes and the reporting of authorized users, mixed credit files and municipal fines – is aimed at ensuring consumers’ credit scores are protected from reporting errors or incomplete information in their credit files.

TransUnion®, Equifax® and Experian® are in the third and final phase of a massive overhaul of their credit reporting processes. The outcome of a landmark settlement agreement reached in 2015 between New York Attorney General Eric T. Schneiderman and the credit reporting agencies, these sweeping credit report changes will benefit consumers across the nation.

“The nation’s largest reporting agencies have a responsibility to investigate and correct errors on consumers’ credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country. I thank the three agencies for working with us to help consumers,” said Schneiderman in a 2015 press release.

 By June 8, 2018, the following initiatives are required to be fully implemented by TransUnion, Equifax and Experian:

Tax Liens: The final reporting implementation comes on the heels of an April announcement that TransUnion, Equifax and Experian would remove all tax lien data from credit reports, giving some consumers a potential credit score boost. In July 2017, the credit bureaus excluded 60 percent of tax liens from credit reports due to a new reporting rule requiring more information. The companies that furnish data to the credit bureaus must include at least three items of personal identifying information: (1) name, (2) address and (3) social security number and/or date of birth.

Civil Judgments: In July 2017, the credit bureaus excluded an estimated 96 percent of civil judgments from consumer credit reports. Just as with tax liens, the information collected must contain the three items of personal identifying information to be included.

Medical Collections: In September 2017, the credit bureaus started rejecting any reporting of medical collections that were less than 180 days old, and medical collections that were paid by health insurance were removed from consumers’ credit reports. Medical debts that are in the process of being paid through health insurance will be removed or suppressed from consumers’ credit reports.

Collection Accounts: Starting in September 2016, collection accounts being reported were required to have information regarding the original creditor and the original creditor’s type of business, or they would be rejected. Accounts that have not been updated by the collection agency for six months will be periodically scrubbed from credit reports – and will no longer impact credit scores.

“No-Contract” Collections: The credit bureaus no longer report subway fines, traffic tickets, library fines and other non-traditional debts and collections that were not the result of a contract or agreement by consumers.

Authorized User Accounts: The credit bureaus no longer allow authorized user accounts to be reported unless the date of birth of the authorized user is provided by creditors. For instance, if you want to add another person as an authorized user on your credit card account to help them establish credit, the creditors must request the authorized user’s date of birth before the account will be reported on their credit report.

Mixed Files: The credit bureaus must now share information with each other regarding mixed file disputes, and when warranted, are required to take steps to correct the error. A mixed file is a reporting error in which a credit file contains more than one consumer’s information. This can happen when two people have similar names, social security numbers, addresses or other identifying information.

Revamp of the Dispute Process: Nationwide policy changes on how credit bureaus address credit report errors make the dispute process less convoluted and more consumer-friendly:

  • Dispute Procedure Change: When a consumer submits a dispute with supporting documentation AND the creditor or collector verifies the account without making changes, the bureau must review the documentation and make changes if warranted.
  • Escalated Disputes: The credit bureaus must implement processes to escalate special disputes (i.e., identity theft, mixed files, etc.). The bureaus are prohibited from instituting any policy that discourages the escalation of these special disputes.
  • Refusing Disputes: The credit bureaus can no longer refuse a consumer’s dispute simply because they do not have a copy of their recent credit report – and are prohibited from leading consumers to believe that a recent credit report is required to submit a dispute.
  • Rejecting Multiple Disputes: The credit bureaus will no longer systematically reject disputes filed within three years of each other. However, there are exceptions to this reporting change. If the dispute comes through a credit repair company using an illegal tactic known as “jamming,” it will be rejected. And it’s worth noting that in some cases, you may be required to provide supporting documentation to submit the second dispute.

 Consumer Notice: The credit bureaus must provide a standardized notice to consumers once a dispute investigation has been completed. The notice will detail (1) the actions that were taken as a result of the dispute, (2) information regarding how to contact the data furnisher(s) involved in the dispute, (3) the dispute results, and (4) the options available to a consumer, including the right to re-dispute with supporting documents if the investigation was not completed to the consumer’s satisfaction.

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