How the Changes in Credit Reporting Will Affect You
Published On August 5th, 2015

More than 200 million Americans have a credit score. A poor credit score can limit your ability to borrow money, obtain a credit card, or even acquire a job in some industries. Your credit score and report have the power to make your life easier or much more challenging.

Credit reports are known for containing many errors, and these errors can be challenging to remove. Credit reporting agencies have avoided spending the necessary time and resources to resolve consumer disputes.

Unpaid medical bills are a significant component many credit reports. Fifty-three percent of the debt listed on credit reports is related to medical bills.

To address these issues, the major credit bureaus, Equifax, Experian, and TransUnion, have agreed to alter the manner in which they report credit information. The major changes involve unpaid medical bills and errors. Some of these changes will begin in the next few months and will take nearly three years to implement fully:

1. Consumer-reported errors will be investigated more thoroughly. Historically, this process was stacked against the consumer. If an error was reported, the creditor could simply claim the information was accurate and the issue was closed. The credit-reporting agency must now investigate the claim with a trained employee and resolve it.
     • If your claim is legitimate, this is great news. True errors are much more likely to be resolved.
     • If you’re simply trying to game the system by disputing any negative information, you could still be in luck. The financial burden placed upon the credit bureaus is great. It’s likely that many disputes will simply be resolved in the consumer’s favor.
     • However, if the dispute is not decided in your favor, your ability to dispute the same item in the future might be limited.

2. Unpaid medical bills will be treated differently. Over 43 million people in the United States have past-due medical bills. Debt related to medical bills accounts for over half of the debt on credit reports. Medical bills are a little different from other types of debt. While it is a financial burden, it typically isn’t the result of acting irresponsibly.
     • Medical-related debt will not show up on a credit report for 180 days. This grace period provides time for the consumer to pay the bill or take other action.
     • Take advantage of the 6-month grace period to catch up on your medical bills. Even if you can’t pay the balance in full, arrange a payment plan with your medical provider. The debt will still appear on your credit report, but you won’t be listed as delinquent.
     • Any medical bills paid by an insurance company must be removed from the consumer’s credit report.

While these changes may seem minor, this is the most significant change in the credit reporting industry since 2003. A considerable amount of pressure has been applied to the credit bureaus to increase accuracy. One example of this pressure is the right of any consumer to obtain free copies of his three credit reports once every 12 months.

Take advantage of these changes and raise your credit score. Spend a few minutes each year reviewing your free credit reports. Dispute any errors and be persistent. If you have any medical bills, work to resolve them before the 180-day grace period has expired. A poor credit score can be devastating to your financial life. Use the system to your advantag

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