Low credit scores make it challenging to get basic services like renting an apartment, getting a cell phone contract, opening a bank account, turning on utilities and even getting a job. Maintaining a strong credit history is essential to financial security.
Credit errors, consumer mishaps (big and small), inaccurate information and confusing offers for credit reports and scores make it difficult for consumers to take control of their credit files.
Over 30 state attorneys general announced a major settlement with the three main credit reporting agencies — Equifax, Experian and TransUnion to address many problems consumers face with consumer credit disputes, correcting errors and credit monitoring products.
The main changes the bureaus will be required to make as part of the settlement center around disputes. Some consumers have found that it is sometimes extremely difficult to get credit report errors corrected especially when identity theft occurs or credit bureaus mix credit files.
States pushed for a better dispute process and under the agreement, the credit reporting agencies will pay the participating states $6 million, and agree to make changes to the way information is added, reviewed and removed from consumers’ credit reports.
What changes will occur
If any of the settlement terms are violated, the participating states can enforce the violations according to state and federal law. Here are the changes:
- The credit reporting agencies cannot market credit monitoring services to a consumer during a dispute phone call until the dispute portion of the call has ended.
- The credit reporting agencies must tell consumers that purchasing a product is not a requirement for disputing information on their credits reports.
- The credit reporting agencies must implement an escalated process for handling complicated disputes, such as those involving identity theft, fraud, or mixed files (in which one consumer’s information is mixed with another’s).
- Each credit reporting agency must notify the other agencies if it finds a mixed file.
- The credit reporting agencies must send a consumer’s supporting documents to the data furnisher. (The credit reporting agencies implemented this change after the attorneys general initiated their investigation and raised the concern that the pertinent complaint documents were not being sent to the furnishers.)
- Consumers may obtain one additional free credit report in a 12-month period if they dispute information on their credit report and a change is made as a result of the dispute.
- The credit reporting agencies are generally prohibited from adding information about fines and tickets to credit reports.
- The credit reporting agencies cannot place medical debt on a credit report until 180 days after the account is reported to the credit reporting agency, which gives consumers time to work out issues with their insurance companies.
- The credit reporting agencies must require debt collectors to provide the original creditor’s name and information about the debt before the debt information can be added to a credit report.
- The credit reporting agencies must tell consumers how they can further dispute the outcome of an investigation into a dispute, such as by filing a complaint with other agencies.
- Each credit reporting agency must provide a link to its online dispute website on the website www.annualcreditreport.com, and the credit reporting agency’s dispute website must be free of ads and any marketing offers.
When will the changes take place
The changes will be implemented in three phases to allow the credit reporting agencies to update their computer systems and procedures with creditors, lenders, banks and other data furnishers that provide information to credit bureaus.
All changes must be completed by 3 years and 90 days following the settlement’s effective date.