Major Credit Reporting Agencies to Revise Error Handling and Medical Debt Reporting
The nation’s major credit reporting agencies—Experian, Equifax, and TransUnion—manage records for over 200 million individuals. These reports directly affect people’s ability to access credit. Now, these agencies have agreed to change how they fix errors and how they treat medical debt in credit reports.
Settlement Announced by New York Attorney General
Eric T. Schneiderman, New York State’s Attorney General, announced a broad settlement on Monday. His office began the investigation in 2012. The agreement will bring changes for consumers across the U.S.
“Credit reports touch every part of our lives,” Schneiderman said. “They affect whether we can get a credit card, a loan, a rental, or a car—and sometimes even a job.”
Improving the Dispute Process
Consumers have long complained about the confusing and frustrating process of correcting credit report errors. Under the settlement:
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Agencies will no longer rely solely on automated systems.
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Specially trained employees will handle disputes.
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Medical debts won’t appear on reports until after a six-month waiting period.
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Once insurance pays the medical debt, agencies must remove it from reports.
Enhancing Transparency and Access
To help consumers, agencies must promote free annual credit reports. Each agency will place a direct link to annualcreditreport.com on their homepage. They must also offer an extra free report to anyone whose credit changes after filing a dispute.
Timeline for Implementation
The credit bureaus will implement most changes over 6 to 18 months. All updates should be in place within three years. This timeline comes from the Consumer Data Industry Association, which represents the agencies.
According to credit expert John Ulzheimer, this agreement shifts the balance of power. “In today’s world, the consumer’s input is less important than the bank’s,” he said. “This settlement changes that.”
Root of the Investigation
Several New York residents had trouble correcting errors. That prompted the Attorney General’s office to investigate. The credit bureaus say they cooperated fully and denied any wrongdoing. Though they won’t pay fines, they will invest heavily in training and system improvements.
“They’ll need to hire many people,” Schneiderman said. “This will cost a substantial amount.”
Broader Impact on Consumers
Credit reports affect far more than loan approvals. They can determine whether someone can rent an apartment, get a phone plan, or how much they pay for insurance. These files feed into scores like FICO, which lenders rely on to assess risk.
Even though consumers have a right to dispute errors, many found the process ineffective. Disputes are often outsourced. Overseas workers reduce them to a numeric code, which they send to the creditor. If the creditor confirms the information, the dispute usually ends there.
Stronger Protection for Consumers
That automatic rejection process will end. Trained staff will now review evidence in cases of fraud, identity theft, or mixed files. Agencies must wait 180 days before listing medical debts. This delay allows insurance payments and billing issues to clear up.
The Consumer Financial Protection Bureau conducted its own study. It found that medical debts often harm consumers unfairly. About half of the unpaid collections on credit reports are medical in nature.
Support From Consumer Advocates
Mark Rukavina, a consultant for nonprofit hospitals, welcomed the news. “Too many people are surprised by medical billing problems only after their credit suffers,” he said. “Removing paid medical debts is long overdue.”
Even FICO acknowledged the issue. The latest version of its scoring model weighs medical debts less than previous versions.
Other Key Provisions in the Settlement
The agreement also bans reporting of debts that aren’t tied to a contract or agreement to pay. That includes things like traffic tickets and fines.
Chi Chi Wu, a lawyer at the National Consumer Law Center, praised the settlement. “It’s a huge win for consumers,” she said. “But ensuring the agencies follow through will be a challenge.”