The New York Attorney General’s office have reached a settlement with the three nationwide credit reporting agencies (Equifax, Experian & TransUnion). The New York Attorney General’s office have been working on these changes in conjunction with the three credit reporting agencies (CRA’s) because of the number of complaints they have received from consumers and the staggering statistics that more than one 1-5 people’s credit reports contains errors that could prevent them from being extended credit.
Contents
List Of Changes
- CRA’s will be required to use trained employees to review any and all documentation a consumer submits as part of their dispute.
In the past they have used a fully automated system and if the creditor comes back and marks the derogatory item (e.g unpaid or late bill) as valid it will stay on the report even if there is evidence that indicates this negative item is not valid. Often the creditors are using an automated system on their end as well, which causes huge problems if there is an error in their system.
To give an example, Lucy paid her cable bill on time and has a copy of her credit card statement to prove it. For some reason, her cable company marks it as unpaid and reports it to the three credit reporting agencies. She disputes this negative item and includes her credit card statement.
With the old system the CRA would automatically send this dispute to the cable company. The cable company would then check their records and see that it’s still marked as unpaid, they’d let the CRA know that this item is valid and it would stay on Lucy’s credit report even though she provided proof that she had paid her bill on time.
With the new system a trained employee would see that Lucy had paid on time and contact the cable company with the proof. Cable company would see that the account had been paid with credit card number ZYX and update their records. The CRA would also update their records and remove the negative item from Lucy’s credit report.
- CRA’s will wait at least 180 days before adding any medical-debt information to a consumers’ credit report. In addition to this, if medical debts are late and are paid by an insurer they will have to be removed from the credit report (rather than the 7-10 years most negative items stay on a report).
If somebody has insurance that covers their medical expenses, they will assume that these expenses will be paid on time by the insurer. This doesn’t always happen, sometimes the insurer will dispute the claim or the payment will be made late for other reasons.
This will give consumers more breathing room for medical related debt being added to their report and in addition if there is a hold up with insurance payment, negative items will be removed immediately rather than having to wait the standard seven years.
- Increased Visibility of AnnualCreditReport.com
AnnualCreditReport.com was set up as part of the FACT amendment to the FCRA and it allows consumers access to their credit report once per year for free. The CRAs will now have to clearly link to AnnualCreditReport.com from their homepage (must be “prominently-labeled”).
- Additional Free Report
If a consumers credit report changes due to a initiating a dispute, they will receive an additional report for free. This will allow consumers to ensure that the credit report has actually been updated correctly without having to pay for another report.
- Payday Loan Debt
If a lender is identities as been in violation of any New York lending laws then CRA’s will be prohibited from including this debt on a consumers credit report.
- Media Campaign About Consumer Rights
The CRA’s will be required to carry out a media campaign in New York, this campaign will be carried out over three years and will focus on that consumers: can receive a free credit report from each bureau once yearly, can dispute errors in their credit reports and can submit evidence in support of disputes.
- Changes will happen over the next 6 to 34 months and apply nationwide, not only in New York.
While New York Attorney General Schneiderman’s office brokered this deal, the changes will apply nationwide. Although it’s unclear if only lenders that are found in violation of New York lending laws will be prohibited from having their debts recorded, or if this will apply to all state’s individual lending laws as well.
It’s also unclear if the media campaign will be restricted to only New York, or will also be nationwide as well.
Our Thoughts
These changes are a step in the right direction, but it’s all things that the CRA’s should have already been doing. It’s ridiculous that a consumer can submit a dispute with evidence and have their dispute rejected without a human actually looking at any of the evidence. This stuff has happened time and time again (and has lead to multiple law suits).
The fact that there is so much inaccurate or incorrect information on people’s reports is also worrying. I’d like to see penalties introduced for data furnishers that have a track record of this incorrect information, especially when disputes are not resolved in a timely manner.
It’s good to see the NY AG office being so pro active in consumer finance matters, they’ve also been leading the charge for less reliance on ChexSystem reports as well. What are your thoughts on these new changes? Let us know in the comments.