Big Win for Consumers! Top Credit Bureaus to Improve Accuracy
By Consumers Union on Monday, March 9th, 2015
It’s time for consumer advocates to take a much-deserved bow: after years of pressure, the top three credit bureaus have finally agreed to take real steps to improve credit reporting accuracy.
Today, New York State Attorney General Eric T. Schneiderman’s office announced a settlement with Equifax, Experian, and TransUnion. The three major credit bureaus have agreed to do a better job of making certain that credit reports accurately reflect a consumer’s creditworthiness. This could dramatically improve the ability of consumers to get a fair deal on a mortgage or auto loan, a good insurance rate, to rent a home, or even get a job.
How will the credit bureaus be more accountable? They will have trained employees investigate the documentation submitted by a consumer in an error dispute relating to identity theft, fraud, or a “mixed file” – when information from one consumer’s account is included in another’s. In addition, whenever a creditor rejects a consumer’s accuracy complaint using the automated system, credit bureaus will take an additional step before dismissing the complaint – they will investigate the documentation. Previously, when challenged, credit bureaus used an automated dispute process and relied on the creditor to confirm the accuracy of a credit report entry, rather than perform a thorough, independent investigation into the matter.
Moreover, consumers will get additional protections against unfair medical debt. Credit bureaus will have to wait 180 days before placing medical debt on a consumers’ credit report. And, if the medical debt is paid by an insurance company, the entry must be removed immediately from the report.
Other protections guaranteed by the settlement include, among other things, that: (1) credit bureaus must clearly post the link to AnnualCreditReport.com on their websites, so consumers can easily find their guaranteed free yearly credit reports; (2) bureaus must provide an additional free credit report to those consumers who have had their report changed due to an error dispute; (3) bureaus cannot report debts owed by New York State consumers to payday lenders who have violated New York’s lending laws; and (4) those who report information to the credit bureaus, known as “data furnishers,” must take steps to improve their accuracy as well.
While the credit bureaus made the agreement with the New York State attorney general, the changes will be rolled out over the next six to thirty-nine months to consumers nationwide. The credit bureaus agreed to these changes after Schneiderman’s office started an investigation in 2012.
These changes could have a dramatic affect on the creditworthiness of millions of Americans. An exhaustive study by the Federal Trade Commission (FTC) revealed that about one in five consumers had a credit-reporting error on one or more of their reports. And, the CFPB’s research showed that about 43 million Americans had past due medical debt included in their credit reports.
Consumers Union took a leadership role in the effort to improve credit reporting accuracy and medical debt reporting. We thank the more than 1,000 consumers who sent in their stories to reveal the extent of the problem. This victory is thanks to consumers like you! Please keep sharing your stories so we can monitor the progress of the reforms.