Two years ago, attorneys general from 31 states formed a coalition to conduct investigations against the three largest credit-reporting agencies for engaging in unethical and reckless business practices. These investigations arose from nearly 30,000 complaints filed with the Federal Trade Commission, and the reporting agencies apparently lacked the willingness or ability to handle these complaints timely and properly. Now, all parties involved have purportedly reached an agreement, which promises to help raise the credit scores of millions of consumers throughout the country.
Before the investigations, Experian, TransUnion and Equifax all placed tax liens and court judgments on consumer’s credit reports, which lowered the consumer’s credit score and caused a variety of hardships for the consumer. According to the report, no court reports these kinds of liens and judgments to the credit-reporting agencies, so the credit-reporting agencies would use third-party vendors to research court records and tax documents to uncover those consumers who had tax liens or judgments against them without verifying the debts actually belonged to the consumer.
What’s more, the information provided could be faulty, containing misspellings, wrong Social Security numbers and dates of birth, or the report would list the wrong debt for the wrong consumer. These errors reportedly affected some 25 percent of credit reports, and the biggest problem for consumers is that once the information appears on their reports, it is very difficult to contest the debt and have it removed.
Under the new agreement, the reporting agencies will no longer be allowed to report tax lien and court judgment information, nor will they be able to place unpaid medical debts on consumers’ reports unless the debt is at least six months old. The three reporting agencies have until August 2018 to ensure that all consumers’ credit reports are accurate and current. Proponents of the agreement estimate that some 12 million consumers could see a rise in their credit scores during this time.