Dramatic changes to consumer credit reporting by debt collectors become effective this summer, scaling back the reporting of tax liens, civil judgments, and medical debt. The result will be improved accuracy and higher credit scores for millions of consumers!
Effective July 1, 2017, these changes should significantly reduce the amount of public records data in credit reports. The nationwide Credit Reporting Agencies, Equifax, Trans Union, and Experian (“CRAs”), are no longer reporting in consumers’ credit reports up to 50% of tax liens and almost all civil judgments.
These reductions are a result of the use of stricter criteria to match public records to a particular consumer’s credit file. As announced by the Consumer Data Industry Association, the criteria will require either a Social Security Number or date of birth in order to match a record— data which most civil judgments and many tax liens do not include. Because the CRAs will not be able to match the public record data to a consumer’s file, about 50% of tax liens and most civil judgment will not be included in the consumer’s file.
The stricter matching criteria is the result of a settlement between the nationwide CRAs and the attorneys general in 31 states and a separate settlement with the New York Attorney General , as well as supervision by the Consumer Financial Protection Bureau. About 6 or 7% of scoreable credit reports (translating to an estimated 11 or 12 million consumers) will be affected according to FICO, but the improvement will be relatively limited. About 75% of affected consumers will experience a credit score increase of less than 20 points.
Effective September 1, 2017, the nationwide CRAs will change the way they report medical debt in two important ways, as a result of the settlement between the nationwide CRAs and the state attorneys general. These two changes will have widespread impact since a CFPB study has found medical debt comprise over half of debt collection items on credit reports.
First, the CRAs will not report medical debt collection items when the date of delinquency is less than 180 days prior to the date that the item is furnished to the CRAs.
This six month period during which delinquent medical debt will not be reported is highly significant, as it allows a period of time to resolve insurance claims or appeals, billing disputes between providers and insurers, or other issues that might legitimately delay payment of a medical bill. Oftentimes, medical bills are needlessly sent to debt collectors during such delays, but eventually paid off when there is a resolution of disputes or claims.
If you spot on your credit report a debt collector reporting medical debt that is less than 180 days old or a civil judgment that does not belong there, you should contact the consumer attorneys that specializes in that collection and credit reports — Paramount Law. We may be able to help you for absolutely no charge to you at all, and help get the item removed from your report.
