Credit reports dictate millions of Americans’ ability to own homes, cars, and even rent apartments. They're recorded by agencies that establish a consumer's ability to repay loans using a plethora of information. However, the resulting reports are often disputed by consumers because of inaccurate information. This has caused an issue and required changes as many have experienced damaged credit despite the erroneous information.
So thanks to changes to what information credit reporting agencies (CRAs) like Equifax, Experian and TransUnion can record, it may now be possible for consumers to automatically attain a higher credit score. The Consumer Financial Protection Bureau (CFPB) has published a report establishing several issues with the quality control systems the CRAs use to establish credit reports.
It has deemed reforms must be made in the acquiring of information from borrowers to ascertain their creditworthiness. The government claims that the more frequent updating records and tighter control of identity-matching criteria may earn consumers more accurate credit scores.
A flawed system
The most common complaint by consumers of the CRAs is of inaccurate or outdated information on credit reports. These inaccuracies led to millions of Americans being penalized with lower credit scores despite the incorrect information. To make matters worse, when you dispute an error on your credit report, the CRAs outsource the disputing process overseas which often inadequately addresses the issue. Lawsuits ranging in the millions have been awarded to consumers as a result.
What the changes will require
The CRAs are now required to removal all civil judgments from credit reports unless they're able to verify the accuracy of such fines every 90 days. They're also required to remove tax liens from a credit report unless they have the individuals name, address and SSN or date of birth to authenticate the consumer's identity. If such information cannot be verified, tax liens and civil judgments must be removed from credit reports.
The CRAs, since July 1, 2017, have implemented changes on new and existing public records that may have immediately improved the scores of millions of Americans. These changes could boost the scores of 8 percent of the population by 10 points or more, according to VantageScore findings. However, FICO estimates that a small segment of the population, 700,000 individuals, could receive as much as a 40 point jump who are directly affected by these issues.
What these improvements will mean
Credit reports and scores are a pillar of American life. They control your ability to borrow, the interest rates you're given and the mortgages you're eligible for. These changes may essentially guarantee greater standards of living for millions of Americans. They may enable consumers to acquire better housing, more flexible interest rates and thus, more control of their financial situation.
Though these changes aren’t certain, the wheels are already in motion to hold Equifax and its counterparts more accountable to the “slip-ups” and purposeful misrepresentations that have been costing consumers millions of dollars. It's believed that after the new requirements are in place, these agencies will self-impose more regimented standards and work on the improvement of their quality control systems.
Read More:
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