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A Report on Credit Reporting – Dramatic Changes to Report

Finally, last month, the Big Three nationwide consumer credit reporting agencies (CRAs)— Equifax, Experian and TransUnion started cleaning up their act and changing the way they report certain liens and judgments.  This should lead to reports being far more accurate and raising the all-important FICO credit score for millions of people.

Historically the CRA’s have done a very poor job of accurately reporting civil judgments and tax liens.  The CRA’s were great at quickly reporting a tax lien or a civil judgment but terrible at credit reporting when those liens were satisfied. This system-wide flaw harmed millions of individuals by reporting only critical and incomplete information.

But now, from the goodness of their corporate hearts (and a not so slight nudge from 31 State Attorney Generals and the Consumer Financial Protection Bureau) they are changing their credit reporting ways.  They will not report judgment liens or tax liens unless those liens contain a date of birth or social security number.  With that data included the CRA’s can now successfully capture and report the satisfactions.

Of course, most civil judgments and tax liens do not contain such data. So many civil judgments and tax liens simply will not appear on the reports.

Also, starting in September, the CRA’s will not be credit reporting delinquent medical debt if it is less than 180 days.  As anyone who has ever received a medical bill, especially after a hospitalization, can attest, it can take months for the invoice to arrive, the insurance company to pay, a dispute to be resolved, etc.

Moreover, up until now, the CRA’s were credit reporting medical debt as delinquent when it was later paid by the consumer’s insurance.  Starting September if the delinquent debt is past 180 days and reported, the CRA’s will remove it when the debt is later paid by insurance.

These significant changes should help lenders accurately gage the viability of a debtor and assist millions of consumers in obtaining loans for homes and cars.

Steven M. Fishman practices in Clearwater.  He currently serves as a Director of the CBA and has Chaired the CBA Bankruptcy Section for over 6,052 days.

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