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Big Changes to Credit Reports Are on the Way: What It Means for You

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Attorneys general in 30 states have reached a $6 million settlement with the major credit reporting agencies Equifax, Experian and TransUnion to make changes in the way they address errors in consumer reports and how some negative information is added to credit reports. The agreement is very similar to one announced March 9 by the attorney general of New York. The Consumer Data Industry Association, which represents the bureaus, says the new settlement is just more states joining the initiative announced in New York in March.

The main changes the bureaus will be required to make as part of the settlement center around disputes — when consumers say they have found inaccuracies in their credit reports as a result of identity theft, mixed files or other errors. Some consumers have found that it is sometimes extremely difficult to get credit report errors corrected, which is why states pushed for a better dispute process.

“Most credit report disputes get resolved quickly and without problems, but for some consumers, trying to fix credit report errors becomes a nightmare,” said Gerri Detweiler, Credit.com’s director of consumer education.

Credit bureaus will be required to share with the data furnishers (creditors, debt collectors, etc.) the documents consumers supply in support of their dispute. Bureaus must also monitor furnishers that supply frequently disputed information.

Without admitting any wrongdoing, the credit reporting agencies agreed to make the following changes, among others:

  • Each agency must notify the other credit bureaus if it finds a mixed file.
  • The credit reporting agencies and data furnishers must use a more detailed system for sharing information.
  • Data furnishers cannot add information about fines or tickets to credit reports.
  • Credit bureaus must wait 180 days from the time medical debt is reported to add the account to a credit report, allowing consumers time to address the bill with their insurance and care provider.
  • Debt collectors must provide the original creditor’s name and details of the debt before an account can appear on a credit report.
  • Consumers who succeeded in disputing an item on their credit reports can get an additional free credit reports from the bureaus.
  • The bureaus must also increase their efforts to educate consumers about their access to free credit reports, while also minimizing marketing of paid products to consumers trying to access free information.

According to settlement documents, the bureaus are required to complete these changes 3 years and 90 days from the effective date of the settlement.

“This settlement should help three sets of consumers in particular: those who have medical bills and are waiting for insurance to process them, consumers who may not even realize they have unpaid fines or tickets until their credit reports have been damaged by collection accounts, and consumers with collection accounts and don’t know why,” Detweiler wrote. “But it won’t solve every consumer problem. And, of course, consumers can’t dispute a mistake if they don’t know about it. So it’s still crucial that everyone reviews their credit reports at least once a year for accuracy.”

These 30 states will receive $6 million among them to cover the investigation they launched into the credit reporting agencies in 2012: Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont and Wisconsin.

Consumers should regularly review their credit, because errors can cause huge problems, like credit damage and subsequent difficulty accessing credit or other services that use credit history as part of the decision to do business with a consumer. You can access your free annual credit reports through AnnualCreditReport.com, and you can also get a free credit report summary every month on Credit.com.

“Your credit profile can be a tool for upward mobility — helping build wealth and financial security — or it can be a weapon of individual destruction,” said Adam Levin, chairman of Credit.com. “The more you know, the more open and efficient the process to help you efficiently correct errors or remove fraudulent information, the more you are empowered to be an effective manager of your credit rather than a victim.”

Poor credit can make it challenging to get an apartment, a job or even a cell phone. Keeping on top of it and quickly addressing any problems is crucial to maintaining as strong a credit history as you can.

More on Credit Reports & Credit Scores:

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  • barskii

    It has been enlightening at the most – Working with my Bank on issues that were resolved 8 years ago – finding that only one credit reporting agency has destroyed my credit and the other two – “it is almost wonderful”. Having to contact Attorney’s, Doctors, and Banks if they are still in business has been time consuming – but maybe by July or September – their mistakes may be corrected… My Bank has researched me – through bills being always paid – never late – never wrote a bad check – only one business debit Card over 60%..
    Thanks for the Insight – I am sharing it with the Bank – With information from your site – I see how – even the Loan officers & Bank Managers are a bit frustrated without proper details… and with incorrect reports & Scores.
    Thanks a Million..

    • http://www.credit.com/ Credit.com Credit Experts

      We’re glad you find it helpful.

      • barskii

        I am honored to have found your site and The research You have provided –
        “what I have done wrong by paying off All of my credit Cards & Closing All of my accounts” –
        – Now, I am having to rebuild my credit – with a short credit history??
        GO Figure that one??
        I had No Idea??
        that, I created the Problem – by paying off debt and closing accounts.
        Instead of keeping the accounts open – & using them every now & then, to keep a longer History?
        .. Amazing..
        “Thanks Credit.Com Experts”

        • http://www.Credit.com/ Gerri Detweiler

          Glad you have found our site helpful. But just to clarify those accounts don’t disappear from your credit immediately when you pay them off. They can still count toward the age of credit history, for example, while they are still reported. But after a period of time they may no longer be reported so make sure you have open and active accounts, even if you pay them in full each month.

          • barskii

            to clarify – I paid them in Full & Closed them.
            Then my Credit Score Dropped – I had to reapply at a low introductory amount – Regardless of my past history.. I wondered Why.. Your site explained what I did Wrong.
            That is a wake up call – – Thanks for your site & The Credit Game Wisdom – My Bank is working with me to go back as far as they can to give me a better rate on a Loan in the future…

          • http://www.Credit.com/ Gerri Detweiler

            Good to know and best of luck to you!

  • disqust101

    3 years and 90 days. How aggressive! And then what are the penalties for not meeting that tight schedule? Probably nothing…

  • Carla Crist

    Is the length of reporting a debt supposed to be 7 years after your last communication with that agency? If so, I’m having issues with that. I went through a difficult time some years back and most of them have dropped off. I do however have a few that I believe have changed that date ever few years to keep it on my report. How am I supposed to prove it? Sometimes they use the date every time that debt goes to another collection agency. What can I do about that?

    • http://www.Credit.com/ Gerri Detweiler

      No it is not based on communication. Collection accounts may be reported for seven years plus 180 days from the date you fell behind with the original creditor. It can be difficult to prove though because most of us don’t keep records that long. Have you tried disputing it on your credit reports?

      A Step-By-Step Guide to Disputing Credit Report Mistakes

  • http://www.Credit.com/ Gerri Detweiler

    Marie – I believe it is May 20, 2015 but am double checking.

    • Marie1967

      Thank you Gerri

    • Marie1967

      Thank you Gerri.

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