credit report

Earlier this month, Equifax, Experian and TransUnion announced the creation of the “National Consumer Assistance Plan,” which will, among other things, change the way these credit bureaus handle consumer disputes and report unpaid medical bills. The Plan, which was created as part of a settlement agreement with the New York Attorney General, will impact both furnishers and users of consumer reports by requiring the credit bureaus to reinforce consistent reporting standards upon furnishers, increasing bureau monitoring of furnishers, increasing the amount of information furnishers must provide to the bureaus in response to consumer disputes, and removing or delaying the reporting of certain medical debt and other information from consumer reports. The Plan is part of what has been called the “broadest industry overhaul in more than a decade” since the Fair and Accurate Credit Reporting Act.

The credit bureaus stated that the Plan “focuses on enhancement in two primary areas: consumer interaction with national credit reporting agencies and data accuracy and quality.” Specifically, the credit bureaus have agreed to be more proactive in resolving disputes over information in credit reports, and will now be required to use trained employees to review, coordinate and respond to consumer disputes, as opposed to the current and largely automated practice of (over 85% of the time) sending the disputed information to its furnisher for resolution.  Additionally, the credit bureaus have agreed to wait 180 days before reporting medical debt information in order to allow consumers to coordinate payment with insurance companies, and to remove from credit reports previously reported medical collections that have subsequently been paid off (as opposed to the current FCRA-blessed practice of leaving that information on the consumer’s report for seven years).  The Plan will be implemented over the next six through thirty-nine months nationwide.

This “self-imposed” reform comes on the heels of years of heavy scrutiny of the credit reporting system from regulators, the White House and Capitol Hill.  We have seen multiple bills, including Rep. Maxine Waters’ Fair Credit Reporting Act of 2014, introduced on the Hill in the past few years, and the Consumer Financial Protection Bureau has been particularly focused on reforming the credit reporting system. Just this past December, the CFPB published a study on the significant impact medical debt has had on the credit system, and the challenges that the current system for incurring, collecting, and reporting medical debt poses for consumers. In its study, the CFPB stated that it is “[a] top priority for the CFPB is to hold all players in the credit reporting market accountable for ensuring the accuracy of data in credit reports.” As part of that effort, the study stated that the CFPB will now require “major credit reporting companies [including Equifax, Experian and TransUnion] to provide regular accuracy reports to the Bureau as part of ongoing examinations.”

With the regulatory and legislative spotlight on credit reporting generally and medical debt specifically, we can expect 2015 to be a big year of reform for the credit reporting system.