Credit reporting agency reform will help consumers

The newly created Consumer Financial Protection Bureau announced an agreement that will likely improve Arizona consumers' experience with credit reporting. Equifax, Experian and TransUnion, the three major credit reporting agencies, have agreed to make changes in their practices in areas related to the investigation of complaints and the types of debts and fees that affect credit reports.

The agreement came in response to research by a news organization and the Federal Trade Commission that showed that fewer than half of credit report complaints were resolved. Errors on credit reports that lower a person's credit score can have a huge financial impact, affecting mortgage and other loan interest rates and even a person's ability to gain employment.

The reforms will help make it more likely that complaints will be fully investigated and that certain types of debt will be excluded from credit reports. Specifically, credit reporting agencies have agreed to investigate each consumer complaint independently, rather than taking the lender's word on the issue. In addition, medical debt, which is thought to affect about 20 percent of all consumers, will be treated differently: There will be a 180-day waiting period for unpaid debt to be added to a report, giving insurers time to pay, and previous black marks that have been resolved will be struck from records immediately, rather than waiting seven years. Finally, black marks from parking tickets and other fines, which are considered involuntary debts, will be excluded from records.

A person facing bankruptcy or the challenges of debt management may benefit from the services of an attorney who deals with personal bankruptcy. To the extent that errors in a person's credit report are inhibiting efforts to avoid bankruptcy by securing new loans or gaining employment, an attorney can help a person navigate the sometimes complex process of getting these errors resolved.

Source: The Motley Fool, "Managing Your Credit Report Just Got a Lot Easier," Selena Maranjian, March 21, 2015

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