Out and About: More transparency and accuracy in credit reporting

In late April, Consumer Action’s Audrey Perrott attended a Credit Builders Alliance webinar titled "What you need to know about new credit reporting requirements: Impacts of the NCAP for reporters and others". The webinar detailed how the new National Consumer Assistance Plan (NCAP) will change the ways that credit reporting bureaus handle consumer data and generate credit reports.

The NCAP was conceived in May of 2015, when the three major credit reporting agencies—Experian, Equifax and TransUnion—came to an agreement with attorneys general from 31 states to improve the ways that the bureaus investigate disputes, restrict the reporting of certain types of negative debts, and ensure that data gets matched to the correct consumer file. As a result of the program’s implementation, consumers will enjoy more transparency and accuracy in credit reporting.

Elisabeth Johnson, director of membership at the Credit Builders Alliance, facilitated the webinar. Johnson discussed the key changes brought about by the NCAP, which will be phased in between now and 2018.

Starting June 15, furnishers (those who report information to the credit bureaus about consumers) will be required to report the original creditor name and the valid account type classification code in all reports to credit bureaus. These fields are required for each account or item reported. In addition, debt that did not arise from a loan contract or agreement to pay, including but not limited to certain fines, tickets and assessments (e.g., library fines, speeding tickets, parking tickets, etc.), may no longer be reported on a consumer’s credit report.

In September, furnishers will be required to issue a full, updated credit report every month, which will include accounts paid within the last 180 days or accounts requiring deletion or correction.

Finally, next September (2017) several new changes will come about. Furnishers will not be able to report medical debt to the credit bureaus for 180 days from the time the debt was incurred (in order to provide consumers and their medical providers time to resolve insurance payments and other billing issues).

In addition, any accounts opened on or after Sept. 17, 2017, will be required to contain consumers’ full names (first, middle, last and generation) as well as their full Social Security numbers and dates of birth (or dates of birth alone if a consumer does not have a Social Security number). This requirement will help to reduce the instances of mixed or merged files. A mixed or merged file occurs when a credit bureau combines information in a consumer’s credit file with information about another consumer. This has occurred when consumers have the same names, birth dates, addresses, etc.

Johnson outlined additional benefits of the NCAP, including increased visibility of the AnnualCreditReport.com website (which allows consumers to get their credit report for free) on credit bureau homepages; more information (including contact information) for companies (furnishers) that provide the bureaus with (sometimes faulty) information on consumers; and the fact that bureaus will no longer be able to sell other “add on” products to consumers who call with a dispute. Credit bureaus often attempt to sell optional credit monitoring and other unnecessary products to consumers when they call.

Consumers (and furnishers) can take steps to help ensure error-free credit reports as well. Johnson recommends using your full name and date of birth on credit applications; alerting lenders to any new addresses or phone numbers; not substituting individual tax identification numbers (ITIN) for Social Security numbers; and informing your lenders if your Social Security number changes (a rare occurence).

Click here if your group is interested in becoming a member of Credit Builders Alliance. (Membership is intended for non-profit organizations, government entities, and consumer and advocacy groups that are committed to helping consumers build credit.)