Credit Reporting Firms Initiating Fair Credit Reporting Strategies

Credit Cards
Credit Cards | Source

Credit Reports Are Used to Get Loans and Insurance

Imagine being denied credit because your credit history report shows entries that lead a lender to believe you are a "deadbeat." What? As far as you know, your credit history is impeccable. Upon further investigation, you discover there are gross errors showing on your report.

If you are a buyer needing a loan to purchase a home, the primary step is to seek loan approval from a lender (also called a mortgage broker). The first step in the loan qualification process is for the lender to pull up your credit report, which is designed to help the lender determine your credit worthiness. This credit report shows your debt history, the amount of debt you owe and how you pay back your debt. The lender relies upon the credit report to display information that will help the lender decide whether or not the lender should take a chance on lending money to you. Ideally, you want your credit report to show that you are the type of person who pays back your debt in a timely manner, then along with other criteria, your credit report is a reliable tool for showcasing your ability and willingness to pay back the loan you seek.

Landlords use credit reports to determine whether or not they will rent a home to you. Car dealers use credit reports to determine whether or not they will give you a loan to purchase a car. Insurance companies use credit reports to determine whether or not they will provide a home or automobile insurance policy.

Erroneous information on your credit report can be the information that keeps you from qualifying for a home loan, renting a home, buying a car, or obtaining insurance. With identity theft on the rise, this is an issue of major concern. In addition, with the vast number of consumers with medical insurance (much thanks to the health care initiative), there is a rise in the reporting of medical debts, consequently because credit reporting bureaus lack the ability to serve consumers adequately, there is also a rise in the number of complaints associated with getting issues resolved and errors removed.

Public Interest Lawyer

Eric Schneiderman has been a New York attorney general since 2010. He is lovingly dubbed as a “public interest lawyer” acting in the interest of consumers to keep organizations operating honestly and forthright in the interest of the public they serve.

Credit Reporting Firms Revamping Their Reporting and Error Resolution Practices

Since 2012, the office of Eric Schneiderman, a New York attorney general, began investigating practices of credit reporting bureaus. This investigation was initiated because of the huge number of consumers who complained about erroneous information on their credit reports and the difficulty in fixing their reports. The investigation resulted in a change in the way credit reporting bureaus would report and handle consumer credit report information.

On March 9, 2015, the three largest credit reporting firms, Equifax, Experian, and TransUnion, reached an agreement with New York State to revamp their reporting and error resolution practices. They will be administering three new practices which will be incorporated, nationwide, over a three year period.

  1. Adequate and professional care

    The credit bureaus will be required to use trained employees to review and resolve consumer disputes. Disputes will now be dealt with in a timely manner and with a competent professional.

    PERSONAL EXAMPLE: Erroneous credit reporting
    My credit report shows that at one point in time, I lived in my ex-husband’s home. I need to clarify that the period of time shown on the credit report was a period that was five years after we were divorced and while he was remarried. I am here to say that I have NEVER lived with my ex-husband after our separation. What’s more, I have never lived in the city where he lived at that time, which was over 20 miles away. I have been divorced for close to 30 years and that erroneous information still shows on my credit report in spite of my efforts to get the information corrected. Having a trained employee capable of correcting errors will go a long way toward clearing up mistakes found on credit history reports.

  2. Timely removal of medical debts

    The credit bureaus will be required to remove medical debts from credit reports once the debts are paid instead of keeping the debt reported for the typical 7 years. Debt reported over a long period of time can weigh down a credit score. Hopefully, when medical debt information is removed as soon as the debt is paid, consumer scores are likely to show a more accurate picture of the consumer's debt payment habit.
  3. A waiting period before adding medical debt information

    Credit bureaus will be required to implement a 180-day waiting period before adding any medical debt information to consumers' credit reports.

    This is an important strategy, because sometimes it takes time for medical offices to generate accurate billing. Consumers will have time to review and clear up discrepancies in their bills.

    PERSONAL EXAMPLE: Medical billing inaccuracies
    I had surgery for which the billing attendant stated that my portion of the bill would be a certain amount. But, when I finally received the bill 45 days later, the bill showed an amount that was double what was originally quoted. It took about 30 days to get things sorted out. In the meantime, my billing statement showed that I was 60 days late on my account. I am happy to see that credit bureaus will be required to wait for a period of time before reporting medical debt information to credit reports.

The National Association of REALTORS® building in Washington, DC.
The National Association of REALTORS® building in Washington, DC. | Source

The Fight to Make Things Right

Unfair credit reporting practices impede a buyer's ability to get a home loan and a renter's ability to rent a home. As a REALTOR® and member of the National Association of REALTORS (NAR), I have seen the NAR’s fight to encourage credit reporting policies and procedures that are fair, honest, and provide a more accurate picture of a consumer's credit history report. The NAR’s efforts began in 2010 and, along with the efforts of other political advocates, such as Eric Schneiderman, their efforts were rewarded, resulting in a move to make things right for consumers.

© 2015 Marlene Bertrand

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Comments 14 comments

MarleneB profile image

MarleneB 19 months ago from Northern California, USA Author

Oh I certainly know what you mean by spending spree, peachpurple. You did the right thing by cutting up your card. It will "pay" off in the long term.


peachpurple profile image

peachpurple 19 months ago from Home Sweet Home

great information. In the past, I used to have a credit card but cut it off when I find spending spree was getting worse


MarleneB profile image

MarleneB 19 months ago from Northern California, USA Author

Hello ChitrangadaSharan. The number of industries using credit history information is making it more important to monitor and correct our credit history reports. Thank you so much for your feedback. I really do value your opinion.


ChitrangadaSharan profile image

ChitrangadaSharan 19 months ago from New Delhi, India

This is very important for everyone to know, since most of us have issues in this regard.

Thanks for sharing this Well written and informative hub! Voted up as useful!


MarleneB profile image

MarleneB 19 months ago from Northern California, USA Author

Hi catmalone. You are definitely right. Since so much of what we do depends on our credit score, consulting with a credit repair representative is the least we can do to maintain accurate information on our credit reports.


catmalone profile image

catmalone 20 months ago

Very informative information and useful. Having good credit is very important. Credit repair services are good to remove negative information off your credit report. You have to make sure you check them out to determine which one meets your needs. Great Hub!


MarleneB profile image

MarleneB 20 months ago from Northern California, USA Author

Thank you, MsDora. Yes. It is always a good day when something happens in favor of the consumer.


MsDora profile image

MsDora 20 months ago from The Caribbean

Good news in favor of fair credit reporting. Thanks for sharing this informative and educational article. The illustrations are helpful.


MarleneB profile image

MarleneB 20 months ago from Northern California, USA Author

Hello poetryman6969. Thank you for your feedback and support. Anyone with credit problems and those who don't, as well, could do better by knowing what's going on in the credit reporting world.


MarleneB profile image

MarleneB 20 months ago from Northern California, USA Author

Hi Ericdierker. Yes, our credit status is a really big part of our lives. It can only help to stay on top of what's showing on the report.


MarleneB profile image

MarleneB 20 months ago from Northern California, USA Author

Hi billybuc! I'd like to meet the rare individual who has not had dealings with credit reports and bureaus. Goodness knows, as a real estate professional, I worked with a great number of people who struggled to get erroneous entries corrected. It can be a nightmare.


billybuc profile image

billybuc 20 months ago from Olympia, WA

Great summary, Marlene! I've had my own dealings with credit reports and the firms that create them. The more you know the better prepared you are to deal with the problems that inevitably come up. Thank you and Happy Thursday to you.


Ericdierker profile image

Ericdierker 20 months ago from Spring Valley, CA. U.S.A.

Excellent writing and information. It is always good to learn more and be informed of matters concerning credit as it is such a big part of our lives.


poetryman6969 profile image

poetryman6969 20 months ago

Voted up for useful and interesting information. Anyone with credit problems should give this a read.

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