Credit Reporting Firms Agree to Consumer-Friendly Changes

Credit Reporting Firms Agree to Consumer-Friendly Changes Photo (cc) by LendingMemo

Your credit report can significantly impact your life, from influencing your ability to purchase or rent a home, buy a car and sometimes get a job, so it’s essential that the report is accurate. Unfortunately, if you found an error, correcting it with the reporting agencies was a huge headache.

Good news for consumers: That headache just got some relief. According to Consumer Affairs, 31 states reached a settlement with the three big credit reporting agencies – Experian, Equifax and TransUnion – agreeing to some consumer-friendly business practice reforms.

“The changes include providing better protections for consumers who find errors on their credit reports, limiting when medical debts can be placed on a consumer’s credit report and establishing specific protocols for victims of identity theft who find fraudulent accounts and debts in their name,” Consumer Affairs said.

Under the settlement, credit reporting agencies are not allowed to place medical debt on a consumer’s credit report until 180 days after the account is reported, which could potentially give consumers time to resolve the debt.

It also calls for the credit reporting firms to better police the agencies that report payment histories, debts, balances and other information to them to ensure accuracy.

The settlement requires the credit reporting agencies to provide participating states with information about lenders and other groups that consistently provide inaccurate information about consumers. The states would have the option to investigate those firms and take legal action if necessary, The Wall Street Journal reports.

The changes mirror those made in a settlement between the three credit reporting firms and the New York attorney general’s office in March. The WSJ reports:

“The New York agreement requires the credit-reporting firms to police the quality of information provided by lenders and other businesses and to potentially refuse information from companies that repeatedly supply inaccurate information.”

Equifax, Experian and TransUnion “have been in compliance with federal and state law” but don’t hesitate to make improvements beyond what the law requires, Stuart Pratt, president and CEO of the Consumer Data Industry Association, a trade group that represents the three big credit reporting agencies, said in a statement. “With the exception of the financial payments the credit reporting agencies are making to the attorneys general to cover the costs of their investigations, consumer education and other purposes, the settlement essentially adopts the plan announced with the New York attorney general.”

As part of the settlement, the three credit reporting agencies will pay a total of $6 million to the 31 states.

Meantime, if you’re looking for ways to strengthen your individual creditworthiness, check out “7 Fast Ways to Raise Your Credit Score.”

Have you ever found an error on your credit report? Was it a headache to get it corrected? What do you think of the new business practices the credit reporting agencies have agreed to? Share your comments below.

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