A Little Help

Effective June 15, 2016 some consumers will start to see a little relief on their credit report as it pertains to certain collections that will now no longer be able to be reported. These are debts that “did not arise from a contract or agreement to pay.”

This would include library fines, parking tickets, speeding tickets and other court fines and fees. Right now a majority of the entities that collect these fines are turning them over to outside collection agencies that in turn report them on the consumer’s credit report. A lot of these companies are next to impossible to get in touch with and will normally refuse to remove them. These collections can cause a drop in a consumer’s score of over 100 points! Starting now the collection agencies will not be able to report them to the credit bureaus; and even if they try, they will be rejected by the bureaus.

There are also some changes coming next year that will help some consumers. Beginning in 2017 the bureaus will not be able to report any medical collection that is less than 180 days old. The collection must be “at least 180 days past the Date of the First Delinquency with the original creditor that led to the account being sold or placed for collection.” If a borrower does incur a medical collection, this change should give them time to pay it before the creditor can now legally have it reported. As with the other fines listed, any medical collection submitted outside of this time frame will be rejected by the credit bureaus.

In order to ensure that the correct accounts are being reported on the correct files, data furnishers must now also include a borrower’s full name, social security number and date of birth when reporting to the credit bureaus. Prior to this it was not necessary to have a social security number in order to report to the bureaus, they could report based just on a name and or address. This practice led to a lot of erroneous information appearing on a consumer’s report, especially when it comes to collection agencies. They will now have to verify that the social they are reporting on is actually associated with that particular collection.

One other change to be aware of that will start happening in the next year is in regards to authorized user accounts. A lot of consumers are added to accounts as an authorized user in order for them to establish credit or hopefully boost their credit score. Starting next year when an authorized user is added to an account they must furnish the user’s date of birth. When someone adds a person to an account, they must furnish the DOB information or the creditor will not report it to the credit bureaus. This is something to keep in mind for anyone thinking about adding an authorized user to one of their existing credit cards or for anyone who wants to be added as an authorized user.

Just some changes to be aware of that should help quite a lot of consumers moving forward. Hopefully there will be more changes to come that will lean more in the direction of helping consumers.