Credit Reporting And Resolution About to ChangeMany people have experienced hassles when trying to fix errors on their credit report. These errors can significantly impact your credit score and make it harder and more expensive for you to buy a home, open a new line of credit or even to get certain jobs and insurance policies. But, in the wake of a multi-state investigation, the three major credit reporting agencies have agreed to improve the way they handle credit report error sand disputes and reporting of medical debt.

The Investigation

TransUnion, Experian and Equifax were the subject of an investigation that started in 2012 and spanned 31 states. Investigators looked into the way that they handled report resolution and consumer disputes, the accuracy of the reports that they issued and the way that they marketed paid-for services like credit monitoring to people who contacted them to dispute their reports. The investigation culminated in an agreement earlier this year that will change the way that they handle errors and medical debt and also require them to be more proactive when resolving disputes over information on credit reports.

Changes in Report Resolution Process

The changes will go into effect nationally over the next six to 39 months. Among the changes that consumers can expect:

  • Reviews from trained employees. When people submit documentation that there is an error in a report, employees at the reporting agencies will now be required to investigate and resolve disputes.
  • Different handling of medical debt. About 43 million Americans have past-due medical debt on their credit reports. Under the new rules, medical debt will not be reported until after a 180 day waiting period. This gives insurers time to apply payments and consumers time to deal with debt that their health plans don’t cover. In addition, medical collections that have been, or are being paid by the insurance, will be removed from the credit report.
  • A database of bad data furnishers. A list of creditors that have made erroneous or false reports will be maintained by all three agencies. They will be required to give this information to states upon request.
  • No marketing during phone calls. When a consumer calls to dispute an entry on a credit report, the agencies will not be allowed to market services like credit monitoring until after the dispute part of the call has ended. Additionally, they will be required to tell customers that they are not required to buy a product to dispute a report.
  • A better, more detailed system. Under the new system, it will be easier to share data.
  • A clearer escalation process. When someone is dealing with a complex problem such as identity theft, fraud or mixed up files, there will be a process to escalate the issue and handle the resolution.
  • Information about mixed files. When one person’s information winds up on another person’s report, the agency that discovers it must inform the other two.
  • Shared documents. When someone disputes an entry on their report, the agencies will now have to provide the documents to the creditor that initially filed the entry.
  • More credit reports. Now, if someone disputes an entry and a change is made, they can get another free report.

Between these changes, it is hope that people will have an easier time with credit repair and will be more empowered to handle financial and credit issues. By making it easier for people to control what goes on their credit reports, officials hope to make it easier for people to get financial opportunities and increase their financial success.

Credit reporting and credit scores have long been an area where the banks and reporting agencies held all the cards. Until fairly recently, FICO scores were closely guarded secrets. Errors on reports could easily keep you from qualifying for credit. And, it was difficult to dispute charges that marred your reports. But, a new agreement with the Attorney General’s Office in New York is leading the way toward fairer credit reporting practices.

An Easier Dispute Process

Roughly 10 million American consumers have been denied credit or been subject to higher interest rates because of errors that dragged down their credit scores. That’s about 5% of all US consumers who have credit reports. But, as part of their deal with the Attorney General, the three major credit reporting agencies are going to make it easier for individuals to report problems with their credit reports.

No Medical Debt for 180 Days

Millions of Americans have negative marks on their credit report because of debts from medical procedures and New Credit Reform. The new rules will increase the amount of time that must pass before you can be reported for an unpaid medical bill. The increased lead time will give you, your doctors and your insurers more time to negotiate payment without the risk of ruining your credit. You will have time to work with your insurer to find out what they cover and to make payment arrangements for what you must pay out of pocket. Combined with rules from last year that remove paid medical debts, this can make a significant positive different in many people’s credit scores.

Additionally, unpaid parking tickets, library fees and other small fines will no longer have the power to tank your credit rating. Debts that are not the result of contracts will no longer be allowed to appear on your credit report.

Disputes Reviewed by Humans

In the past, many credit disputes were automatically declined because they were handled by automated systems. Even if you legitimately did not owe a debt, the reporting agencies would decline to remove the black mark without thorough investigation. Under the new reforms, trained personnel will have to manually review the documentation for every credit report dispute. This provides a more nuanced process and reduces the risk of debts improperly left on people’s credit reports.

The changes will not appear overnight. Estimates show that it will be between 6 and 36 months for all of the reforms to go through. Plus, even with the changes, it will still be necessary to take steps like regularly viewing your credit report for errors or forgotten debts. In the meantime, let Key Credit Repair help you navigate this complex system and help you attain the home ownership opportunities you deserve. Feel free to contact our office at 617-265-7900, or schedule a free consultation below.