credit report disputes

They Haven’t Done That Yet?! N.Y. Attorney General Simplifies Credit Report Disputes

You may have never heard of Eric T. Schneiderman, but he just made your life a whole lot easier.

The New York Attorney General last week announced an agreement with all three credit bureaus — Experian, Equifax, and TransUnion — that requires them to resolve credit errors quickly and prevent old medical debt from lowering credit scores, among other things.

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

The three credit bureaus collectively maintain credit scores for about 200 million Americans, and those scores are used by banks to determine whether we get loans — and at what price. That makes accurate records important, but more than a quarter of Americans have mistakes on their reports.

Schneiderman’s office managed to negotiate some needed improvements, which we spell out below. But we’ve got some suggestions to make things even better…

Getting rid of robots

What the attorney general says: Credit bureaus have to hire and train employees specifically to clear up credit mistakes. Previously, a “fully-automated process” was used to verify mistakes with a creditor, and no further investigation was made if the creditor said the mistakes were valid, regardless of any documentation consumers sent.

What says: It’s kind of shocking that credit mistakes could just be dismissed by a robot in the first place. It’s their word versus yours, and that requires a human assessment of the truth. The hiring of these specially-trained employees should take place as soon as possible, not over the next three years, which is how long the agreement allows for.

Waiting period for medical debt

What the attorney general says: Medical debt now gets a 180-day waiting period before it shows up on a credit report. And it vanishes once the debt is paid by insurance companies. Previously, it had stayed on a credit report for up to seven years, even once it had been paid off.

What says: Why stop at 180 days before medical debt shows up on your credit report? Insurance companies can be slow with paying medical expenses, especially on costly surgeries. Half a year barely cuts it — medical debt should get at least a year or longer before it shows up on your credit report, since it stays on your report for so long.


Easy access to free credit reports

What the attorney general says: A link to must be easily visible to web visitors of Experian, Equifax, and TransUnion. Currently, the three bureaus make you pay for a copy of your credit report after you get your free one. And they don’t do a particularly good job of promoting the free option, although they sure will be in New York soon (see below).

What says: How about getting rid of paying for your credit report altogether? The three credit bureaus should provide the information they keep about you, to you, at no cost. This is a losing battle for the credit bureaus, since many banks are already offering free credit scores to consumers.

Replacing credit reports with mistakes

What the attorney general says: If you find a mistake on your credit report and file a dispute, you get a new report to verify any changes — for free.

What says: What if you get your free report back and find another mistake? You should be allowed to get as many free credit reports as you need to verify that there aren’t mistakes, any time of the year.

Keep an eye on complaints about lenders

What the attorney general says: The CRAs will create a “working group” to develop metrics for how companies that provide credit data handle consumer complaints.

What says: This is another really obviously needed improvement, but the implementation is super vague: “Each CRA will implement policies to monitor furnishers’ performance and take corrective action against furnishers that fail to comply with their obligations.” What policies? What action? What obligations?

No payday loan debts

What the attorney general says: This one’s just for New Yorkers, but if you have debts on your report from that violates New York’s lending laws, those aren’t allowed on your report. Payday loans are illegal in New York, so they can’t be included.

What says: In practice, people who need payday loans probably already have poor credit and won’t see much benefit from having them left off their reports. But it should still apply nationwide.

A typical payday loan has an interest rate of between 391 to 521 percent. (Online payday loan rates are even worse.) By their own admission, payday lenders are offering money to people who don’t have other traditional options — and many borrowers get stuck taking out payday loan after payday loan just to cover ordinary living expenses.  Rates that high make it difficult to break the cycle and set you up for eventual failure, so it’s not a great predictor of creditworthiness.

Educational advertising

What the attorney general says: People of New York, prepare for a media blitz from all three credit bureaus about your rights to getting a free annual credit report, how to dispute mistakes, and how to submit documents supporting your argument.

What says: As an online publication dedicated to educating consumers about their credit and rights, we fully support the attorney general’s office to make sure that more media do the same.

The New York attorney general’s office said that “all three credit reporting agencies cooperated” and “demonstrated a strong commitment to reforming practices to increase protections for consumers.” Hopefully they’ll put whatever ads they come up with online for everyone, not just New Yorkers, to see — we’ve love to link them.

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