Credit Bureau Reporting Overhaul

There may be light at the end of the tunnel for consumers complaining of unjust and inaccurate credit reporting behavior frequently used by TransUnion, Experian, and Equifax. By August 12, 2018, the three major bureaus (TransUnion, Experian, and Equifax) will be forced to comply with new policies and procedures – this comes as a result of a multi-state investigation that Ohio Attorney General, Mike DeWine, initiated and an additional 31 state attorney general’s joined in 2012. This settlement was announced in May of 2015, giving credit agencies 3 years and 90 days for all regulations to be effective and in place.

While this settlement will not amend any of the Fair Credit Reporting Act (FCRA) laws, it will help reduce the chances that a consumer will be wrongfully denied a line of credit, or even a job, based on an inaccurate credit report.  Once this goes into effect, all organizations that collect personal credit information will be forced to invest in upgrading systems, operations, controls, and training their staff in order to comply with this new legal agreement.

The three major components are:

  • Improvement of data – Accuracy and quality are at the core of this agreement. Any data submitted without the creditors name will be rejected and in order for new accounts to be reported birth dates for the authorized users will be required.

In order to comply, credit agencies and furnishers will need to implement a centralized credit-reporting management system which will save financial institutions in time, money, and a head-ache by combining the multiple systems that are currently used to record consumer credit data; this system will also help ensure that all consumer data is accurate and up-to-date. They will need to implement changes to their operations, systems, and reporting process. A group of internal audit executives will need to be initiated in order to establish and enhance these new controls.

  • Dispute resolution – Credit agencies will be required to enhance their dispute handling and accelerate the processing of consumer complaints.

New procedures will have to be implemented for review and tracking of consumer disputes. This will require new investigative procedures and timelines. Credit agencies have been notorious for their poor dispute handling techniques – making it very difficult for consumers to correct and/or remove inaccurate information from their file.

  • Monitor furnishers – Under the agreement, the top three credit agencies must form a National Credit Reporting Working Group; the purpose is to share the best practices and policies while monitoring furnisher performance and accuracy. If they fail to adhere to these practices they will face penalties and fines.

The settlement agreement will not only affect all the credit bureaus, but also the financial institutions that use/analyze consumer credit information; implementation will be costly and time-consuming.  As you can see, these changes will hopefully change the current business practices of credit reporting agencies and come as a benefit to consumers.

It sounds like good news but based on our experience, every time changes are implemented and the media expresses great confidence that the credit reporting process will improve, we are greatly disappointed.  Only time will tell.

If you have specific questions about credit feel free to reach out to us for a free credit review so we can give you insightful feedback and evaluate whether you are a candidate for credit repair, monitoring, or building.

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