• New Credit Reporting After Settlement Addressing Disputes and Medical Debt
  • April 14, 2015 | Author: Matthew G. Burg
  • Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Cleveland Office
  • Credit reports are obviously important. They have a major impact on consumers’ creditworthiness; their ability to obtain loans and at what rates and also whether to provide insurance, or employment, among other purposes. Their use - businesses make decisions based upon a consumer’s credit. So not unexpectedly, the recent consumer protection laws and governing bodies, i.e. the Consumer Financial Protection Bureau (CFPB), are very interested in the credit reporting world and the consumer reporting agencies (CRAs) that compile credit information and create the credit reports.

    We’ve all heard of the big 3 - Equifax, Experian and TransUnion - the largest nationwide providers of consumer credit reports that collect and provide credit information on more than 200 million consumers in the US. A recent settlement with the New York Attorney General will change how these three handle errors and treat medical debt. One change includes a stronger effort by the CRAs to resolve disputes raised over information contained in the credit reports they compile. In the past the CRAs at times seemed to pass the dispute to the respective lender. Now they will be expected to investigate a consumer’s claim through the use of trained employees.

    Another change will focus on medical debt. In 2014, 64 million working-age adults said they had problems paying their medical bills in the prior 12 months [1]. Going forward, medical debts will include a “waiting period” - the debt will not be put on consumers’ credit reports until after 180 days to allow insurance payments to be taken into account. Additionally, all medical debts will be removed from a consumer’s credit report after the debt is paid by insurance.

    “The nation’s largest reporting agencies have a responsibility to investigate and correct errors on consumers’ credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country,” New York Attorney General Eric Schneiderman said. Implementation is expected to begin over the next few months [2].

    [1] Data from: S. R. Collins, P. W. Rasmussen, M. M. Doty, and S. Beutel, The Rise in Health Care Coverage and Affordability Since Health Reform Took Effect, The Commonwealth Fund, January 2015.

    [2] Reference: Credit reporting agencies promise change; Reuters; March 9, 2015.