Last updated on March 4, 2020 at 09:54 am
Credit reporting firms gather details about consumer debts, balances, late payments, bankruptcies, foreclosures and other credit-related information, and from that data, produce individual consumer scores that help lenders determine whether or not to approve applicants for loans and at what interest rate. As such, these firms and the reports they distribute have a significant impact on many aspects of consumers’ lives, including their ability to rent an apartment, purchase a home or car, or even potentially negatively influencing their ability to be hired for a job after a background check.
Recognizing the challenges, the three biggest credit reporting companies have agreed to change the way they handle some reporting errors (including outstanding medical bills) regarding the information they store and share on more than 200 million Americans.
Changes to come
Under an agreement announced recently with New York state, the three giant credit reporting agencies, Equifax Information Services LLC, Experian Information Solutions Inc. and TransUnion LLC will be more proactive in resolving disputes over information contained in credit reports—a process federal watchdogs and consumer advocates have long been concerned about.
Most changes will be implemented nationally and will kick in over the next six to 39 months.
Going forward, credit reporting firms will be required to use trained employees to review the documentation submitted by consumers in order to correct inaccurate information on their report. Acknowledging the importance of the credit report and resulting ratings, the firms have an obligation to look into every consumer complaint and resolve the dispute.
They are also altering the way that they address unpaid medical bills. 43 million Americans are seriously impacted by the appearance of past-due medical debt on their credit report. The information has typically been reported by collection agencies as soon as they receive unpaid bills from hospitals, doctors and other medical professionals. Since these may be unpaid because the insurance companies delay their payments and not the fault of consumers not paying, the new agreement will have credit reporting firms waiting 180 days BEFORE adding any medical debt information to the consumers’ credit reports.
The statistics are alarming—with studies by the 2013 Federal Trade Commission indicating that one of five consumers is affected by credit report errors. The new agreement, the first reform since 2003, is designed to provide more protection for consumers and better manage the accuracy of the reports. Do you have thoughts about these new changes? Tell Plymouth Rock in New Jersey by leaving a comment below.
Additional details can be found online in the Wall Street Journal article entitled, “Credit-Reporting Giants Agree to Overhaul,” authored by AnnaMaria Andriotis, updated March 9, 2015.
Ken Bagner is a member of Sobel & Co. LLC. He is a member of the American Institute of Certified Public Accountants and the New Jersey Society of Certified Public Accountants. Plymouth Rock Assurance is proud to partner with NJSCPA to bring you valuable tips for about your financial health. Qualified members of the NJSCPA can receive a discount on their car insurance through Plymouth Rock Assurance New Jersey.