If you have ever pulled a credit report for yourself or an employee, you know that these reports can be confusing and unwieldy, and should you find an entry that does not belong to you, perish the thought, since the dispute process can be lengthy and quite frustrating. The major credit reporting agencies – Experian, TransUnion, and Equifax – have heard your cries, though, and changes are on the horizon.
Back in 2015, the agencies, along with 31 state attorneys general, brokered a settlement that resulted in the National Consumer Assistance Plan. The changes that will come from this plan could help as many as 4 million people improve their credit by as much as 20 points, which, in some cases, could be the difference between not qualifying for and being eligible for a mortgage loan. The details are still being finalized, but testing is already underway for some aspects of the plan, and should be implemented in mid-2017. Here’s what we can expect to see:
- Consumer debts that did not derive from a contract or other agreement by the consumer to pay will no longer be recorded on credit reports. Examples of these types of debts would be traffic tickets or government fines.
- The dispute resolution process for consumers will be streamlined and enhanced to give consumers more power over their private information. Further, if a consumer is unsatisfied with the outcome of a dispute, he or she will be given information about further options they can pursue.
- Consumers who find and successfully dispute an error on their one free credit report each year will be able to obtain a second credit report at no charge.
- Agencies submitting medical bills to consumers’ credit reports will now be required to wait 180 days from the time an account is created before reporting the debt as due for collection. This will give consumers and their medical providers time to resolve insurance payouts and other billing issues.
The credit bureaus were given three years to implement the new policies outlined in the agreement, so the changes will not be seen immediately. It is also worth mentioning that major changes such as these will only apply to the latest versions of the bureaus scores, which have not been adopted by all lenders. The most recent version, for example, of the FICO score is FICO 9, released earlier in 2016.
What do I do until then?
In the meantime, you can work on fixing your credit by identifying and adjusting your credit score killers, such as carrying consistently high credit card balances; closing credit card accounts; making late payments on credit cards, mortgages, or student loans; opening too many new credit accounts; and defaulting on a loan or credit card.
How does this affect me?
In most cases, credit reports are not run in conjunction with background reports, although in some cases, such as tenant screening, they may be. However, it is important to remember that, as an applicant, you do have rights under the Fair Credit Reporting Act (FCRA) where credit reports are concerned:
- You must provide written consent for the credit report to be obtained.
- You are entitled to a copy of the credit report before the employer uses the report to deny employment.
- You are entitled to a copy of a document called a Statement of Rights, which lists your rights along with information on how to correct erroneous credit report information.
At The Cedalius Group, the employment background screening provider you can trust, we are committed to providing the most up-to-date, comprehensive information available regarding all aspects of consumer screening. We pride ourselves on conducting conscientious searches that reflect true and accurate information on every applicant. Call us today at 404.963.9772 or visit us online to learn more.
The Cedalius Group offers insight into the background screening industry for educational purposes. We always recommend you consult with your legal counsel to determine practices that best suit your business needs.