10th Mar 2015 13:32
WASHINGTON (Alliance News) - New York Attorney General Eric Schneiderman has reached a settlement with the three largest US credit reporting agencies in a deal that will improve their procedures to fix errors and increase protection for consumers with medical debt.
The three largest credit reporting agencies or CRAs - Experian Information Solutions Inc., Equifax Information Services LLC and TransUnion LLC maintain credit information on about 200 million consumers in the US
The credit information is compiled by the CRAs through voluntary submissions from "data furnishers" such as banks and collection agencies. The CRAs provide credit reports to companies who then use the reports to assess consumers' credit-worthiness.
Creditors use credit reports to assign numerical ratings, called 'credit scores,' which help in determining whether to grant credit to consumers and in determining the cost of credit.
Attorney General Schneiderman said, "Credit reports touch every part of our lives. They affect whether we can obtain a credit card, take out a college loan, rent an apartment, or buy a car - and sometimes even whether we can get jobs. The nation's largest reporting agencies have a responsibility to investigate and correct errors on consumers' credit reports."
Under the deal reached with Schneiderman on Monday, the three credit reporting agencies are required to institute several reforms to increase protections for consumers, over a three year period.
The CRAs will now be required to improve their dispute resolution process.
Instead of the present system of using a fully-automated process to review consumer complaints, the companies will now be required to employ specially trained employees to review all supporting documentation submitted by consumers for all disputes involving fraud, identity theft or mixed files - a situation where two consumer files are mistakenly mixed together.
Consumers will have the right to challenge inaccurate information in their credit report by initiating a "dispute" with a CRA.
Schneiderman noted that more than half of all collection items on credit reports are medical debts.
The CRAs will now implement a 180-day waiting period before medical debt will be reported on a consumer's credit report. This waiting period will provide extra time to permit resolution of delinquencies that result from insurance delays or disputes.
The credit-reporting agencies will also remove all medical debts from a consumer's credit report after the debt is paid by insurance. This will protect consumers from unfair harm to their credit histories due to medical debt.
Additionally, the CRAs will take steps to make consumers aware that they are legally entitled to one free annual credit report from each CRA via AnnualCreditReport.com.
The Attorney General's agreement requires the CRAs to provide a second free credit report to consumers who experience a change in their credit report as a result of initiating a dispute.
Meanwhile, the Consumer Data Industry Association, the trade association that represents the three CRAs, said that the three companies have launched the National Consumer Assistance Plan.
The plan is a comprehensive series of initiatives that will enhance the accuracy of credit reports and make the process of dealing with credit information easier and more transparent for consumers.
Copyright RTT News/dpa-AFX
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