“Big 3” Credit Bureaus Settle With 31 States Over Credit Reporting Mistakes

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By Consumers Union on Tuesday, May 26th, 2015

The top credit reporting agencies are going to have to pay up for their credit reporting mistakes!

On Wednesday, 31 state attorneys general announced a settlement with Experian, Equifax, and TransUnion over credit reporting errors. Not only will they have to pay $6 million to the states, they will also have to take important steps to reduce errors. The agreement does not extend to special consumer reporting agencies.

We know that credit report mistakes are surprisingly common – and that it can be a real hassle to get them fixed. About one in five consumers has a credit reporting error. This can be devastating for consumers, because a credit reporting error could cost you a potential job, apartment rental, or mortgage. For example, James from Fort Walton Beach, Florida, shared:

“My credit scored dropped from 780 to 620 because the local hospital turned over to a collection agency an ER medical bill that was not mine but was my last name and was my birthday MONTH, not day or year. So the collection agency started trying to collect and no matter what I did, from contacting the credit bureau, contacting the collection agency, contacting the billing department of the hospital, NOTHING I did could get the obviously incorrect charge removed from my credit report. The worse thing was that at the time, I was applying to buy a home. Needless to say, the lender did not want to lend money because of the drop in score. It was unbelievable and the most incredible thing is that there was nothing that I could do about it. I finally sent, after several months of trying everything else, a certified letter to the CEO of the hospital letting him know what was going on and it was fixed within a few days. However, the damage had already been done.”

We hope that the settlement will improve credit reporting so that others can avoid James’s experience. The settlement ensures a number of important protections for consumers in participating states. For example, the major credit bureaus will have to hold for 180 days before putting medical debt on consumer credit reports – which is essential, because so often medical debts show up on credit reports before the consumer even realizes that money is owed. As CU’s Pam Banks recently noted, “Millions of Americans have experienced medical billing problems or been overwhelmed by medical debt.  Even after your medical debt is paid in full or settled, it can remain on your credit report for years, hurting your ability to get credit.”

The “big 3” bureaus will also have to improve how they investigate disputes, for example by assigning experts to handle cases involving identity theft, mixed files, and fraud. And, they are banned from pitching credit monitoring products to consumers while they’re discussing the credit report mistake. In addition, debt collectors will have to identify the original creditor before a debt is placed on credit reports. For more information about the settlement, please see the Ohio AG’s press release.

These bureaus will have three years to put the practices into place.

Many of the stipulations in this agreement were included in a settlement between New York State and the “big 3” bureaus, announced in March. The credit bureaus had vowed to extend the protections guaranteed in the New York settlement to consumers in all states over the course of three years.

Last week’s settlement is an important step in making credit reports a more accurate reflection of a consumer’s creditworthiness. CU will be looking closely to see how well the credit bureaus adhere to the agreement, and whether it will be enforced.

Help us monitor the changes in credit reporting system. Have you had a credit reporting error? Share your story!

 

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  8. […] years ago, a coalition of more than 30 state attorneys general cracked down on the credit bureaus, negotiating a deal that required sweeping changes. The bureaus dropped some error-ridden data sources from […]

  9. […] of 31 state attorneys general cracked down on the credit bureaus and negotiated a deal that required sweeping changes to their practices. (New York’s attorney general had previously reached a separate settlement […]

  10. […] of 31 state attorneys general cracked down on the credit bureaus and negotiated a deal that required sweeping changes to their practices. (New York’s attorney general had previously reached a separate settlement […]

  11. […] of 31 state attorneys general cracked down on the credit bureaus and negotiated a deal that required sweeping changes to their practices. (New York’s attorney general had previously reached a separate settlement […]

  12. […] of 31 state attorneys general cracked down on the credit bureaus and negotiated a deal that required sweeping changes to their practices. (New York’s attorney general had previously reached a separate settlement […]

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