By Vijay Yadlapati, Charles Dawson, Daniel Blair
On Monday, March 9, 2015, the 3 largest credit-reporting firms – Equifax, Experian, and TransUnion – reached an agreement with New York state to overhaul their reporting and error resolution practices. Many of these changes will be implemented on a national basis roughly over the next 3 years. Specifically, the firms will be required to use trained employees to review and resolve consumer disputes.
Another major change will be the removal of medical debts from credit reports once the debts are paid instead of the typical 7 years. Finally, the credit bureaus will be required to implement a 180-day waiting period before adding any medical debt information to consumers’ credit reports. This grace period is intended to allow consumers to clear up any discrepancies and catch up with other unpaid bills.
Since 2010, NAR has called on industry participants to reassess and amend credit policies that have been unduly restricting consumer access to mortgage credit. From initial reports, the agreement appears consistent with the Consumer Financial Protection Bureau’s key concerns with the credit-reporting firm’s error resolution process and the rising role of medical debts in consumer reports.