March 9, 2015 by John Ulzheimer
Today the New York Attorney’s General office will announce a settlement agreement* with the three national credit reporting agencies that will make sweeping changes to what information can be reported and how consumer disputes must be handled. And despite the fact that the settlement will be made with just one state, New York, the credit bureaus will implement the following changes nationwide over the next 3-4 years:
*It’s important to note that the credit bureaus were not found to have violated any law.
Medical collections cannot be reported to the Credit Reporting Agencies (“CRAs”) for six months from the date the debt first goes delinquent. So, in reality it’ll be at least seven months before medical collections can be reported to the CRAs. This gives the insurance process time to pay claims without the consumer ending up in collections for no reason.
Medical collections that are paid, or are being paid by insurance, must be deleted from the consumer’s credit reports. These debts arguably should have never been on the consumer’s credit reports in the first place because they were to have been paid by their insurance coverage.
Collection Agency Credit Reporting
Debt collectors will have to furnish the name of the original creditor with each collection account reported to the CRAs. The CRAs will reject any collections that are not accompanied by the name of the original creditor. Collectors that do not comply with this requirement could have their accounts removed from the credit file system.
Collectors cannot report items that did NOT arise from a contract or agreement to pay including, but not limited to fines, tickets and assessments. This will be retroactive to items that have already been reported.
Collectors will be required to reconcile accounts that have not been paid in full. Collections that have not been updated on a credit report in the past six months can be removed by the CRAs. Collectors will also have to remove collection debts that have been sold, transferred or are no longer being “worked” by their collection agency.
Consumer Dispute Process
The CRAs cannot refuse to accept a dispute simply because of how it has been filed. The CRAs cannot refuse a dispute because the consumer has not recently received a copy of their credit report or doesn’t have some sort of report ID number. CRAs shall eliminate any practice that requires the consumer to have, or must obtain, a current credit report in order to file a dispute.
Empowered Employees – If a consumer files a dispute with the CRA and provides documents AND the item is not modified as per the consumer’s request because the original furnisher (a bank or a collection agency) verified the item as being accurate, then the CRA must assign an agent with the discretion to modify the item to determine whether or not the change requested by the consumer was warranted.
Repeat Disputes – Except for credit repair disputes, the CRAs shall not deny consumers the right to file one additional dispute simply because they had already filed a first dispute.
The CRAs must notify the consumer that he or she may submit supporting documentation to the CRAs if they are dissatisfied with the CRA’s investigation results.
Escalated disputes for mixed files and fraud – Specialized groups will handle these unique types of disputes. They will review any supporting documentation and all relevant information in the consumer’s credit file to facilitate the consumer’s dispute.
Deceased Credit File Indicator Errors
The CRAs must share with each other when a consumer files a dispute regarding a credit file entry that shows him or her as being deceased, and for which the CRA has determined that the consumer is not deceased and has taken steps to both correct the error and ensure it doesn’t show up again. This can happen if you are a joint account holder with someone who has passed away and the creditor reports the account as belonging to someone who is deceased. Deceased indicators can only be reported at the individual consumer level rather than at the account level under the terms of the settlement agreement.
Mixed Credit Files
The CRAs will share info with each other when they’ve confirmed that a consumer has a mixed credit report (data belonging to two consumers becoming comingled across reports). These are rare, but very difficult to correct because the furnisher isn’t sending in incorrect information. The CRAs just have a hard time placing it on the right report.
Additional Free Credit Reports
If a consumer files a dispute through an AnnualCreditReport.com procured credit report, that results in their credit reports being modified as a
result, they are granted an additional free credit report disclosure through the same website during the next 12 months.
Authorized User Credit Reporting
The CRAs will prohibit the reporting of authorized user accounts WITHOUT a date of birth (both month and year). This will help to ensure the account shows up on the correct credit report (the report belonging to the authorized user). An authorized user is a non-liable party to a credit card account. In many cases parents add their kids as an authorized user on one of their existing credit cards.