If you struggle with maintaining good credit, this news could be life-changing for you. The credit bureaus have reached a settlement with attorney generals in 30 different states that will alter the way certain debts are reported, tracked and disputed on consumer credit reports. The new changes are designed to make it easier for consumers to dispute erroneous records and stay on
top of their credit monitoring in a more engaged, in-depth manner. So how will these changes affect you?
Medical Debt Changes
Currently, out of all the debts sent to collections listed on consumer credit reports, over half of the entries are medical debts. In many cases, the debt went overdue because of an insurance coverage dispute, resulting in the insurance company paying the bill, but paying it late. This is not the consumer’s fault and should not affect their score, but sadly it does. Under the new regulations, credit bureaus will hold medical debt entries for 180 days to give insurance companies and consumers the chance to make sure the medical bill is paid. This will eliminate a vast majority of collection debt on current credit reports.The changes will affect current medical debts listed on reports that ended up being paid in full by the insurance companies – those
will be removed.
Tickets and Fines Policy
In the past, unpaid parking tickets or library late fees showed up on credit reports on occasion. This isn’t fair to the consumer, as they never requested credit and then defaulted or paid the money late – they were simply charged a fee for a service or a violation. It shouldn’t affect their credit. So the settlement also addressed this issue and agreed to remove all of these miniscule records as they appear. However, if the fine or fee is sent to a collections agency, it will show up on the report. Consumers must still take care to pay the fines in a timely manner to avoid this, but they won’t be penalized on their credit score for a late library book return
Disputing an Error
Before the ruling, credit bureaus always told consumers they could dispute charges they believed were false, but the responsibility fell to the consumer to contact the creditor and resolve the issue. The credit bureaus take the consumer’s letter and explanation into consideration, but pretty much depend on the word of the creditor company over the consumer. Now, the bureaus will be responsible for putting together a team of independent reviewers who will look at the evidence provided by the consumer and weigh both sides. If the creditor fails to resolve a plain mistake, the bureau will not count that against the consumer any longer.
To repay consumers who find and successfully dispute an error, the credit bureaus must offer one additional free credit report that year so that the individual can verify the changes went through. Consumers now have the ability to double check their report after disputes have been filed instead of waiting one entire year to review the changes.
Get ready for positive alterations to your credit and stay vigilant on checking your report and your score as often as possible to protect against mistakes and fraud.