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Why Your Credit Report Errors Will Now Be Easier To Fix

Author: Christopher Harris

Equifax, Experian and TransUnion, the three major agencies that track and report consumers' credit, have reached an agreement to make changes to how they handle credit report errors and unpaid medical bills in what The Wall Street Journal is calling the broadest industry overhaul in more than a decade.

These changes are the result of a joint agreement these credit-reporting firms made with New York state and its attorney general, Eric Schneiderman, and will affect 200 million Americans scored by these bureaus.

Credit Report Disputes Must Be Resolved by Credit Agencies, Not Lenders

Under the agreement, Equifax, Experian and TransUnion are required to resolve consumers' credit report disputes. Previously, only a fraction of credit disputes were fully reviewed and resolved by the bureaus, reports CNN Money.

The Consumer Financial Protection Bureau found in a 2012 report that just around 15 percent of disputes are resolved by credit agencies while the other 85 percent are referred to the lender for investigation. If the lender indicated that the existing information was correct, the credit agency would typically not make any corrections to the report, according to The Wall Street Journal.

Through the new agreement, credit-reporting firms will take a more proactive approach to resolving disputes. A new requirement will have a trained employee of Equifax, Experian or TransUnion handle creditors' disputes, to review all submitted documentation and investigate the information to identify and resolve errors.

Following a credit agency's resolution of a dispute, it will be required to provide the consumer with the outcome of the dispute, as well as outline next steps to take if the consumer is dissatisfied with the results, reports CNBC. If changes are made to a credit report as a result of a dispute, the consumer is also entitled to obtain a free annual credit report, even if he received a free annual report within the last year.

For victims of identity theft, correcting errors on their credit reports will be especially easy if they can provide credit-reporting firms with proof of identity theft or credit fraud. Credit agencies will create a more comprehensive dispute resolution protocol to address errors for these victims.

Medical Debts Get New 180-Day Grace Period

Medical debt is another huge headache for consumers. Unlike other debt, it might be nearly impossible to avoid and difficult to pay off, while doing a lot of damage on a credit report. According to The Wall Street Journal, 43 million Americans have past-due medical bills, and medical debt accounts for 52 percent of debts listed on credit reports. The new agreement with Equifax, Experian and TransUnion will change how medical debt is reported by the firms and how it affects consumers' credit scores.

A new policy will set up a 180-day grace period from when a medical debt is first incurred to when a collection of the debt will be noted on a consumer's credit report. This policy will also be applied retroactively to remove late payment or dings from collection agencies for medical debts that were paid or will be paid for through insurance, reports CNBC.

More from GoBankingRates:

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