When Will I See Big Credit Report Changes?

Unless you live under a rock, you’ve probably heard or read about the landmark settlement agreement reached between the New York Attorney General and the credit reporting agencies (CRAs) Equifax, TransUnion, and Experian. You can read more about it here, and here.  The credit report changes will impact consumers nationwide and not just those living in the state of New York, as it didn’t make sense for the credit bureaus to have two policies dependent on where you live.

It is important to understand that many of the pending credit report changes will require an extensive amount of programming work on the part of the CRAs. These companies can’t simply snap their fingers and enact such massive overhaul to their established processes. As a result, the CRAs have been given up to 39 months to fully implement said changes.

The roll out of the numerous credit report changes set forth in the settlement agreement is broken down into a series of three phases. Each phase has a deadline. Below is a summary of the actual timeline, specified in the settlement agreement, detailing the deadlines that the CRAs must follow when implementing each phase of the settlement.

Phase 1 Deadline: September 8, 2015

The initiatives included in Phase 1 of the agreement are required to be implemented by no later than 6 months from the date the agreement was signed (aka the “Effective Date.”) on March 8, 2015. They include the following:

• Dispute Procedure Change: When a consumer submits a dispute to a CRA containing supporting documentation AND the creditor or collector verifies the account without making any changes, then the CRA will be required to assign an agent of its own to review the documentation and to make changes to the disputed account IF (and only if) the agent determines a change is warranted.
• Escalated Disputes: The CRAs must begin implementing processes to escalate special disputes (i.e. identity theft, mixed files, etc.) when they are received. The CRAs are prohibited from instituting any policy that discourages the escalation of these special disputes.
• Refusing Disputes: The CRAs will no longer be allowed to refuse a consumer’s dispute due to the fact that he/she did not obtain a copy of their credit report recently. Furthermore, the CRAs will be prohibited from leading consumers to believe that obtaining a copy of their credit report is required in order to submit a dispute.
• Metro 1: The announcement of the upcoming, full retirement of the older “Metro 1” credit formatting will be made.  Most large lenders report to the CRAs using the current Metro 2 format.  This is important because Metro 2 provides lenders with more options regarding how to report your accounts.
• Authorized User Accounts: Data furnishers will be made aware that newly opened authorized user accounts that are reported to the CRAs must include the date of birth of the authorized user.

Phase 2 Deadline: September 8, 2016

The initiatives included in Phase 2 of the agreement are required to be implemented by no later than 18 months from the agreement’s Effective Date. They include the following:

• Medical Collections: Collection agencies will be given instructions from the CRAs regarding the new codes that must be used to identify medical collections that have been paid or are being paid by insurance.
• General Collections: The CRAs will change the manner in which collection agencies will be permitted to report information to their databases. Collection accounts that are reported will be required to have information regarding the original creditor and the original creditor’s type of business. Collection accounts reported without this information will be rejected. There will also be penalties for collectors who consistently fail to comply with the requirement – namely the collectors may face the loss of their ability to report accounts to the CRAs and the suppression of all of their previously reported accounts from consumer credit reports.
• No Contract or Agreement Collections: Any collections not the result of a contract or agreement (i.e. a fine) will be removed from the CRAs’ databases.
• Deceased Indicator: The CRAs will create and implement a process that will allow them to share information with each other regarding consumers who disputed inaccurate tradelines showing a deceased indicator AND the CRA verified the deceased indicator was indeed incorrect.
• AnnualCreditReport.com: The CRAs will allow consumers the ability to request a second credit report via AnnualCreditReport.com provided that a consumer initiated a dispute based on a credit report pulled from the website. The website must also be updated with educational information regarding escalated disputes and what qualifies a dispute to receive this special status. Finally, the CRAs must add additional educational materials to the AnnualCreditReport.com website regarding the dispute process and the types of supporting documentation which could be helpful to include with a dispute.

Phase 3 Deadline: June 8, 2018

The initiatives included in Phase 3 of the agreement are required to be implemented by no later than 39 months from the agreement’s Effective Date. This final deadline is also referred to as the “Completion Date” in the settlement.

• Metro 1: The older credit reporting format will be fully retired. Data furnishers will be required to use the newer Metro 2 format or have their accounts rejected for credit reporting.
• Medical Collections: The CRAs will begin to reject for credit reporting any medical collections that are not at least 180 days old (based on the date which the original account became delinquent). Medical collections paid (or are being paid) by insurance will be removed or suppressed from credit reports.
• Collection Account Reconciliation: Collectors will have to reconcile any unpaid collection accounts currently being reported on a consumer’s credit report. Collection accounts that have not been updated by the collection agency for 6 months or more will be periodically removed or suppressed.
• Authorized User Accounts: For newly opened accounts the CRAs will not allow authorized user accounts to be reported unless the date of birth of the authorized user is provided.
• Disputes: The CRAs will no longer reject a consumer’s second dispute (with the exception of disputes from credit repair companies) solely because a consumer had submitted a dispute in the previous 3 years. Note: consumers may be required to submit supporting documentation in order to qualify for this right.
• Mixed Files: The CRAs will share information with one another regarding mixed file disputes. If a CRA receives such a notice, and determines the file to indeed be mixed, then it must take steps to correct the problem.
• Consumer Notice: All CRAs will be required to provide a standardized notice to consumers upon the completion of dispute investigations. The notice will detail (a) the actions which were taken as a result of the dispute, (b) information regarding how to contact the data furnisher(s) involved in the dispute, (c) the dispute results, and (d) the options available to a consumer, including the right to re-dispute with supporting documents, if the investigation was not completed to the consumer’s satisfaction.