Consumers just scored another big win when it comes to credit reporting.
The three major credit reporting agencies -- Equifax, Experian and TransUnion -- have agreed to pay $6 million and make changes to the way information is added, reviewed and removed from consumers' credit reports as part of a settlement with 31 state attorneys general.
Why should I care?
Credit reports generate your credit score, which is used to determine whether you get -- and what interest rate you pay for -- any type of loan. They're also used by cell phone companies, insurance providers, landlords and even potential employers. An error can wind up unduly and significantly costing you, so any improvements in the dispute and reporting process will help all consumers in the long run.
Worried there may be mistakes on your credit report? Check it for free at mybankrate.com.
What are the bureaus required to do?
The settlement is similar to a deal struck in March by New York Attorney General Eric Schneiderman that led the bureaus to collectively launch their National Consumer Assistance Plan. It requires the bureaus to, most notably:
- implement an escalated process for handling complicated disputes, such as those involving identity theft, fraud or mixed files.
- maintain information about problems with groups that furnish them data and provide a list of those entities to the states upon request.
- use a better, more detailed system to share data.
- provide consumers with one additional free credit report in a 12-month period if they dispute information on their credit report and a change is made as a result of the dispute.
- provide a link to its online dispute website on the website AnnualCreditReport.com.
- tell consumers how they can further dispute the outcome of an investigation.
The settlement also limits the bureau's direct-to-consumer marketing and prohibits certain information, including fines, tickets and certain medical debts, from being added to a person's credit file.
"This settlement requires the credit reporting agencies to do a better, more careful job, to produce more accurate credit reports, and to be much more responsive when consumers call to correct their mistakes,” Ohio Attorney General Mike DeWine said in a written statement.
Why is this happening now?
The settlement stems from a multistate investigation DeWine started in 2012. But the credit bureaus' dispute process has long been a point of contention among consumer advocacy groups. And, this February, the Consumer Financial Protection Bureau said it would continue to push for change regarding the resolution of disputes reported to the credit bureaus.
"The three nationwide credit reporting agencies have been in compliance with federal and state law, but as we showed in launching the National Consumer Assistance Plan, we do not hesitate to make improvements beyond what the law requires when doing so will benefit consumers," Stuart Pratt, president and CEO of the Consumer Data Industry Association, the trade association that represents Equifax, Experian, and TransUnion, said in a written statement.
What should I do if I find an error on my credit report?
Bureaus typically have information on their website or on the report itself that explains how you can get the dispute process started. The three major credit bureaus allow you to file disputes online. They will notify you of the results within 45 days. Check out this Bankrate article for more information on disputing errors on your credit report.
Have you ever had a hard time getting an error on your credit report removed? Let us know in the comments below!
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