Credit Reporting Bureaus Are Changing Their Rules - A Win for Consumers

With every passing year a person’s credit score becomes more central in basic decisions people face on a daily basis.  Leases for housing, ability to obtain automobile or homeowner’s insurance and, yes, even employment are some of the areas that are now affected by your credit score.  Your credit score is ultimately determined by what is reported in your credit file with the 3 major credit reporting bureaus: Equifax, Experian and TransUnion, and can be impacted by such things as accounts in collections and collection lawsuits reported under the public records section of the report.

Removing Tax Liens and Civil Judgments from Credit Reports

As part of a national settlement with states Attorney Generals reached in 2015, Equifax, Experian and TransUnion agreed to begin eliminating tax lien and civil judgments from consumer’s credit reports that are not actually verified by obtaining courthouse records.  It was estimated that the removal of such information from the credit reports could improve consumer credit scores up to approximately 10 to 20 points.  One of the reasons for eliminating this type of reporting information is the likelihood of error, ie the tax lien or judgment could be for someone with the same or similar name.  So additionally, the elimination of errors from a credit report will also be helpful in its own right.  These changes are now slated for implementation July 1, 2017.

Trade Association Warns Tighter Credit Market

The improvements to credit reporting are not sitting well with the lenders, however.  The trade association, American Bankers Association, warns that this settlement could result in a tighter credit market.  This is a fairly typical industry response to any type of consumer protection improvements and its always wise for the lending industry to remember if they don’t lend, they are not making money either.  It is time for improvement to the credit reporting industry.  Many consumers who take the time to be proactive with their credit reports not only find inaccuracies but, even with the dispute process currently in place, do not receive satisfactory results from written disputes filed with the reporting bureaus.

In addition to the efforts to improve credit reporting resulting from the National Consumer Assistance Plan, there are federal consumer protection statutes such as the Fair Debt Reporting Act and the Fair Debt Collection Practices Act that can provide relief to consumers who are facing inaccurate reporting on their credit reports.  If you have discovered that your credit report contains inaccurate information regarding your debts, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation.