Credit Reporting Agencies Agree to Improve Error-Dispute Process, Delay Unpaid Medical Debt Postings

Credit Reporting Agencies Agree to Improve Error-Dispute Process, Delay Medical Debt PostingsThe big three credit reporting agencies — Equifax, Experian and TransUnion — have agreed to sweeping changes in how they resolve consumer complaints about errors on their credit reports and how they treat unpaid medical bills.
The agreement marks the biggest expansion of consumer protections in the credit-reporting industry in years.
Announced Monday by the New York Attorney General’s office, the agreement affects all Americans with credit profiles, more than 200 million consumers who rely on the reports — furnished by the three companies to lenders — when obtaining car loans, mortgages, credit cards and personal loans.
The biggest changes to be implemented over the next three years by Equifax, Experian and TransUnion have to with the handling of consumer disputes and a new 180-day waiting period before unpaid medical debt will be reported. The medical debt grace period will give consumers more time to deal with potential health insurance coverage disputes or payment delays.
The office of New York State Attorney General Eric Schneiderman has been investigating the practices of the three companies since 2012 after receiving complaints about errors on state residents’ credit reports, and the complex and frustrating process they face to get those errors removed from their credit reports.

“Credit reports touch every part of our lives,” Attorney General Schneiderman said. “They affect whether we can obtain a credit card, take out a college loan, rent an apartment, or buy a car – and sometimes even whether we can get jobs.”
Resolving Consumer Disputes
The Consumer Financial Protection Bureau (CFPB) reported three years ago that the credit bureaus resolved an average of 15 percent of consumer disputes internally. The remaining 85 percent were referred to the lenders or creditors, prolonging the process. Consumer advocates have been fighting to ease the burden on borrowers fighting to have their credit files cleaned up.
The new agreement requires that the credit reporting agencies “employ specially trained employees to review all supporting documentation submitted by consumers for all disputes involving mixed files, fraud or identity theft.”
The agreement also requires that all disputes by consumers filed through the automated resolution system be thoroughly reviewed, including supporting documentation.
Consumers have the right to challenge inaccurate information in their credit report by initiating a “dispute” with Equifax, Experian and TransUnion. Attorney General Schneiderman’s investigation of the agencies revealed that in some cases the firms used “a fully-automated process in which they reduce consumers’ disputes to a three-digit code and submit the code and any documentation to the creditor.” If the creditor verifies the challenged information, the credit reporting agency  rejects the consumer’s dispute without conducting any further investigation.
Unpaid Medical Bills
Under the new agreement, the three firms will also have to wait 180 days before adding any medical-debt information to consumers’ credit reports. This new grace period will allow consumers time to clear up discrepancies and catch up with other unpaid bills. Additionally,  the medical debt will have to be removed from the credit file when they are paid by an insurance company, regardless of the time frame.
An estimated 43 million Americans have past-due  medical debt on their credit reports, according to the CFPB. About 52 percent of all debt on credit reports is derived from medical expenses. Collection agencies normally report medical debt to the credit-reporting firms after they receive unpaid bills from hospitals, doctors and other medical professionals. Many medical debts are recorded as unpaid because insurance companies delay payments.
Additional Free Annual Credit Report
Consumers have a lageal right to obtain one free credit report per year from each of the three credit bureaus. The Attorney General’s agreement requires the agences to provide a second free credit report to consumers who experience a change in their credit report as a result of initiating a dispute. This requirement will permit consumers to verify that the agency made the correction to their credit report without have to pay for a second credit report.
Moreover, the agreement requires the three credit bureaus to include a “prominently-labeled hyperlink” to the AnnualCreditReport.com website on each of the agencies’ homepages. “The hyperlink must appear directly on the CRAs’ homepages or via a drop-down menu visible on the homepages,” the New York A.G.’s office said. AnnualCreditReport.com is the official website for consumers to obtain their free credit reports.

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