March 9 New York Attorney General Eric
Schneiderman reached a settlement with the three biggest U.S.
credit-reporting agencies in a deal that will change the way
they handle errors and treat medical debt.
Under the agreement, set to be announced on Monday, Equifax
Information Services LLC, Experian Information Solutions Inc and
TransUnion LLC, will be more proactive in resolving disputes
over information contained in their reports.
The three credit-reporting agencies (CRAs) collect and
provide credit information on more than 200 million consumers in
the United States.
Credit reports provided by the CRAs are used to assign
numerical ratings called "credit scores," which help lenders
determine whether they should grant loans to consumers and at
what interest rates.
According to the deal, medical debts will not be put on
consumers' credit reports until after a 180-day "waiting period"
to allow insurance payments to be taken into account. In
addition, all medical debts will be removed from a consumer's
credit report after the debt is paid by insurance.
The settlement also requires the CRAs to institute several
reforms over the next three years, including giving consumers
the right to challenge inaccurate information in their credit
reports by initiating a dispute.
In disputes, the CRAs will be required to use trained
employees to review all supporting documents submitted by
consumers who see an error in their files.
"The nation's largest reporting agencies have a
responsibility to investigate and correct errors on consumers'
credit reports. This agreement will reform the entire industry
and provide vital protections for millions of consumers across
the country," Schneiderman said.
The three companies launched a plan on Monday and said the
implementation will begin over the next few months.
"The National Consumer Assistance Plan...will enhance our
ability to offer accurate reports and make the process of
dealing with credit information easier and more transparent for
consumers," Stuart Pratt, chief executive of the Consumer Data
Industry Association, the trade association that represents the
three CRAs, said in a statement.
The agreement follows several efforts to make consumers more
creditworthy. Last August, personal credit score provider FICO
said it would leave out or discount medical debt from
its scores, which would boost the credit record of many
borrowers, while helping lenders to better assess risk.
(Reporting by Shivam Srivastava in Bengaluru and Karen Freifeld
in New York; Editing by Anupama Dwivedi)