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Credit Reporting Reform

Credit Reporting Reform

After years of negotiations, the three major United States credit reporting bureaus have reached a comprehensive settlement with thirty-one states which will lead to changes in the way credit report disputes are handled as well as making changes to certain information found in credit reports.  The three companies — Equifax, Experian and TransUnion — will also pay six million dollars to the states participating in the pact.

The agreement is similar to one recently made between the three companies and New York.  It is being praised by the states’ attorneys general as a boost to borrowers’ ability to establish and maintain good credit.  Although the companies have been in compliance with applicable federal and state credit reporting law, the changes are designed to better help protect consumers from being denied loans and jobs due to erroneous information contained in their credit reports.

The major changes required by the settlement include:

  1. information about fines and tickets can no longer be added to a consumer’s credit report,
  2. a medical debt cannot be added to a consumer’s credit report until 180 days after it is reported so that the consumer’s insurance company will have ample time to process the underlying medical claims,
  3. the credit reporting companies must maintain records detailing problems with inaccurate data furnished to them from collections agencies, lenders and others; these records must be available for the states so that any patterns of inaccurate reporting can be spotted and investigated,
  4. the companies must establish more intense procedures for dealing with things such as identity theft and
  5. although federal law gives a consumer the right to a free credit report each year from each credit reporting company, under certain circumstances additional free reports might have to be provided.

The following states are participating in the settlement:  Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont and Wisconsin.

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