Thanks to a 2015 settlement agreement between the New York Attorney General and the three credit reporting agencies, some important changes are on the way in regards to credit reporting. An additional agreement between the credit reporting agencies and another 31 state attorney generals ensure that the change will be nationwide. The changes are being made in three phases with the most noteworthy and significant being phase three which started in September and must be implemented by June 8, 2018.
The most crucial aspect of this is around medical collections:
- The credit bureaus – Experian, Trans Union and Equifax will reject any credit reporting of a collection that is not at least 180 days old. This gives the consumer time to pay the collection before it is reported.
- Medical collections that are paid (or are being paid through insurance) will either be removed or suppressed from credit reports.
- Collection accounts that have not been updated on a credit report for six months or more will be periodically removed or at least not factored into the scores.
- The credit reporting agencies will remove the reporting of any collection that did not arise from a contract or agreement to pay by the consumer. These would include collections for traffic tickets or library fines.
This could have a significant impact on a consumer’s credit scores. A collection account, even for the most minor thing, can affect a consumer’s score by 100 points or more. Not having those collections factored in or having them removed will open the doors for a lot of consumers that could not qualify before.
Authorized user accounts will also be impacted. The credit bureaus will not allow authorized user accounts to be reported unless the date of birth of the authorized user is provided by the creditor. So going forward, anyone adding an authorized user to their credit cards will need to supply the user’s date of birth before it will be reported on their credit report.
The bureaus will now have to communicate with each other regarding mixed files. If one of the credit reporting agencies receives a dispute from a consumer that their file is mixed (i.e. multiple socials, names etc.) the credit bureaus must communicate this with each other and correct the problem.
The credit reporting agencies can no longer reject a consumer’s second dispute of any account because they had a previous dispute of the account in the last three years. This does not apply to disputes made by credit repair companies on the behalf of a consumer. Credit repair companies are notorious for making multiple disputes for consumers on the same accounts monthly. All but the first dispute will now be rejected.
All of these changes will be implemented on all scoring models and must be in place by June of 2018. Some of these changes are long overdue and should have very positive impact on thousands of consumer reports.