Thank you New York Attorney General Eric Schneiderman!
After a year-long investigation and aggressive negotiations, the three big credit reporting companies have some important changes to make. This is a win for consumer rights across the nation… but don’t celebrate just yet.
Experian, TransUnion, and Equifax have more than three years to implement the required changes and the burden of proof will still be on the consumers when it comes to disputes. As always, be vigilant and check your credit report regularly. If you schedule it right, you can get a free copy of your report every four months by rotating through the three credit reporting companies at annualcreditreport.com.
Here are 5 BIG CHANGES that may improve your credit reporting experiences soon:
1. Past Due Medical Debts will be given a 180 day grace period before being sent to the credit reporting companies.
Great news since more than 43 million Americans have past due medical bills negatively affecting their credit scores today. This 180 day delay should provide enough time for you to wrangle with your insurance company and/or negotiate a payment plan with your medical services provider.
2. FICO is changing its credit score formulas to downgrade the effect medical bills have on your credit score.
Past due medical bills make up more than 50% of the active collection accounts in the US. Over 1.7 million households filed bankruptcy in 2013 because of medical debt! But, recent studies have shown that medical debts are not a good predictor of how creditworthy a person actually is. FICO is listening and will adjust their equations accordingly. Plus, the credit reporting companies now must also track and investigate medical providers that generate a disproportionate number of consumer disputes.
3. Experian, Equifax, and TransUnion must hire and train HUMANS to process your disputes! No more automated, computer generated, “we take the debt-collector’s word for it” denials.
Finally! A real person will review the documentation consumers send in with their disputes. A big improvement over the current method – which is basically if the creditor says the debt is valid, the item stays on your report.
4. You will now get an additional free copy of your credit report if you file a dispute – so you can follow up on items being deleted.
It sometimes takes weeks, even months, to remove items from your credit report after they were found inaccurate. No more! The credit reporting companies must beat the ticking clock and make the changes before you get your next report.
5. Debts you may owe that did not originate from a contract (like tickets and fines) are no longer to be included on your credit report.
Expensive parking tickets, court fees, and other fines are already a heavy burden for many people. At least now they won’t tank their credit scores, too.
In the media, this is being hailed as the most important overhaul to the credit reporting industry in over a decade. Maybe it is, maybe not. It really depends on how well these new regulations are going to be monitored and enforced.
In a recent radio interview, Ira Rheingold, head of the National Association of Consumer Advocates, explains it this way:
“The truth is the law has been pretty clear [all along], and the credit bureaus have – in my opinion – been violating the law all of this time, which led to Attorney General Schneiderman’s actions.”
While the credit reporting companies have admitted no wrongdoing, and have not been found guilty of rights violations in this investigation, they certainly have not been acting in the consumers’ best interest.
Be proactive! Check your credit regularly and contact us if you have any questions or concerns.
If you have any questions, please give us a call at 770-952-5168 or contact us online.
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photo courtesy of flic.kr/p/8bDtNe
This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult a attorney who specializes in consumer rights and defense.