CREDIT PROTECTION - The New Rules

"How new rules could protect you from credit errors" PBS NewsHour 3/9/2015

Excerpt

SUMMARY:  In the past, the way credit rating agencies reviewed disputes or errors frequently hurt consumers.  The nation’s three largest credit rating agencies have negotiated with the state of New York to change their review process, and to wait longer before posting unpaid medical debts.  Judy Woodruff learns more from New York Attorney General Eric Schneiderman.

JUDY WOODRUFF (NewsHour):  It’s the biggest change for consumers and their credit ratings in more than a decade.  The three largest credit rating companies, Equifax, TransUnion and Experian, have agreed to change the way they review errors, a process that until now has frequently hurt consumer ratings.

Under an agreement with New York State, the agencies will use specially-trained employees to review information disputed by a customer.  They will also be required to wait 180 days before posting unpaid medical debt to a report to allow insurance payments and conflicts to be resolved.  The companies collect and provide information on more than 200 million Americans.  And roughly 52 percent of all debt on credit reports is from medical expenses.

The attorney general of New York, Eric Schneiderman, negotiated the settlement.  And he joins me now.

Mr. Attorney General, thank you for being with us.

This report basically says that it’s going to reform the entire industry, so that makes it sound like it’s riddled with problems now. Is that the case?

ERIC SCHNEIDERMAN, Attorney General, New York :  Well, we did — we started an investigation because we received in my office — and other offices have the same experience — many, many complaints from customers who — that there were mistakes on their credit reports, submitted documentation proving that the bad information should come off the report, but couldn’t get anything done.

So, what we discovered was the industry — and this agreement really transforms the way the industry operates — that the industry was just relying on the raw data it got from what are called data furnishers, who are the lenders.  So they were relying on — if I took out a mortgage and I took out a car loan and I took out a credit card, and the lenders, the creditors said, I didn’t pay, essentially, the credit reporting agencies were taking them at their word.

And if a customer would send in documents showing that wasn’t true, they just were passing them on to the creditors.  And if the creditors came back to the reporting agency and said, we still think we were right, they weren’t doing an independent investigation.

So we now have changed the way they deal with this process and it is going to make the data better, because they’re taking responsibility for making sure they have accurate information.  And they going to be — they’re committed to doing their own independent review of every customer complaint, regardless of what the lender or the data furnisher says.