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Credit Reporting Firms Initiating Fair Credit Reporting Strategies

Updated on August 15, 2016
MarleneB profile image

Marlene is a California real estate broker who has been selling property since 1989. California Real Estate License number 01056418.

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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