Unpaid taxes, doctor bills, and old judgments keeping your credit score down? Perhaps you have some erroneous data on your credit report that’s nearly impossible to get taken off? Inasmuch as we all try to pay all of our bills on time, every time, there are times when information gets onto your credit report that may be inaccurate, outdated, or simply false. That may be about to change.
Through a settlement between the big three credit bureaus and 31 state attorneys general, the National Consumer Assistance Plan has several key pieces of the settlement that will come into play this year, including those that affect the reporting of authorized user accounts, medical debts, civil judgments, and tax liens.
How will that affect your credit report?
Most importantly, these changes should help reduce many of the credit report errors that keep individuals from qualifying for credit cards, car loans, mortgage loans, and even personal loans. They may even help those who have been denied jobs based on the information contained in their credit reports.
Exactly what changes to credit reporting will we see?
- First off, beginning July 1st, all civil judgement and public tax lien data that does not conform to the new reporting standards will be excluded by the three big credit bureaus. In a nutshell, unless the data includes an individual’s name, address, and either a social security number or date of birth, it will be excluded from credit reports. Further, this information must be physically verified every 90 days by making visits to courthouses. Simply because of logistics and economics, the majority of civil judgments will likely be excluded after this date. (If you have this type of information on your credit report, you may see a credit score increase of about 20 points.) Unfortunately, there is also a downside to this change. Mortgage lenders may be forced to due more “due diligence,” and if so, prospective homeowners could face additional costs, red tape, and so forth when they are trying to get approved for financing.
- Secondly, medical debts cannot be reported until 180 days after the date of delinquency. This will protect you in the event that insurance payments are delayed due to verification issues, questions, etc. And, once the bill is being paid or has been paid in full by insurance, any previously reported medical debt must be removed from credit reports.
- And finally, authorized user data must include the full date of birth for any newly added user to all existing and new credit card accounts.
While not everyone will benefit from the credit bureaus’ commitment to cleaning up credit reporting, it will likely save most of us a lot of the stress that goes with trying to get inaccurate information off your credit report.