Consumers who’ve had their credit scores hammered by tax liens, judgments, and inaccuracies, may now receive some relief.
From an agreement made between the three major credit reporting agencies (Trans Union, Equifax, and Experian, collectively referred to as “the CRA’s”) and 31 state attorneys general, the CRA’s launched the National Consumer Assistance Plan. The Plan raises standards in order to make credit reports more accurate and make it easier for consumers to correct any errors on their credit reports.
The plan was launched in March 2015, to be implemented over three years. Many of the changes just took effect last month (July 2017). These changes include:
- Public records such as tax liens and civil judgments must be verified to higher standards before being included on a consumer’s credit report. It’s estimated 12 million consumers could see tax liens and civil judgments dropped from their reports.
- According to the Federal Trade Commission, about 21% of consumers have errors on their credit which damages their credit scores. These higher standards for verifying data should reduce these reported inaccuracies.
- Bankruptcy and foreclosure records will continue to be utilized and will likely not be affected, as bankruptcy data reported to the credit bureaus already meets these higher standards of accuracy.
- Medical debts won’t be reported until after a 180-day “waiting period” to allow insurance payments to be applied. The CRAs will also remove from credit reports previously reported medical collections that have been or are being paid by insurance.
- The CRAs will eliminate the reporting of debts that did not arise from a contract or agreement by the consumer to pay, such as traffic tickets or fines.
These changes could give a boost to the tarnished credit scores of many consumers, thus granting them greater access to consumer loans such as mortgages and credit cards.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.