Credit Reporting Rules Are Changing—How Will This Affect You?

On Monday March 9, 2015 the three main credit reporting agencies announced major changes to the way they will handle disputes and report medical bills.

Equifax, Experian, and TransUnion announced the agreement after months of negotiations with New York state Attorney General Eric Schneiderman. The goal of these new rules is to reduce reporting errors and make them easier to correct.

These credit reports are used to determine your credit score, which affects your ability to get a loan and is used to determine the amount of interest you’ll pay. How will these new reporting rules affect you and your score?

Increased Quality And Accuracy

The reporting agencies are focusing on increasing the accuracy of reports and handling disputes. Changes include:

• Eliminating reports on debts that didn’t originate from a contract or agreement—for example, this would stop reporting on tickets and fines
• Working to help victims of fraud and identity theft
• Helping consumers navigate the credit bureaus by providing instructions when there is a dispute
• Increasing transparency by giving customers more information when they contest a claim

These changes are intended to make it easier for consumers to contest claims and correct errors.

Medical Bills

The reporting agencies are overhauling the way they handle medical bills in an effort to improve the accuracy and quality of reports.

There will now be a 180-day waiting period before medical bills are reported. This change is designed to allow insurance payments to go through and to give consumers a chance to handle any discrepancies.

The reporting agencies will also remove previously reported medical debt that has been paid by insurance. This is a substantial change for consumers since it normally takes 7 years for a delinquency to be removed from a credit report.

These changes follow an announcement made by Fair Isaac Corp. (FICO) last August. A consumer’s FICO score is the most common score used by loan providers when determining eligibility and interest rates. FICO previously announced that medical debt would have a smaller effect on credit scores and that the time it took for medical bills to be paid by insurance wouldn’t count against consumer’s FICO credit scores.

Eric Schneiderman stated that, “The nation’s largest reporting agencies have a responsibility to investigate and correct errors on consumers’ credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country.”

The new rules are intended to improve customer interactions with the credit reporting agencies, reduce errors, and improve the quality of credit reports.

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