Change is coming and it’s positive! The Attorney General, Eric Schneiderman, from the great state of New York has been working with the credit reporting agencies on an agreement that should be good for the more than 200 million credit users in America. This agreement by the 3 major credit bureaus, Equifax, Experian, and TransUnion is the most significant change since the Fair and Accurate Credit Transactions Act of 2003, which gave birth to the ability to receive your credit report for free once every 12 months at www.annualcreditreport.com. The intent of this agreement, the National Consumer Assistance Plan, is to help streamline and attempt to make credit reports more accurate and timely. In addition, the agreement limits the possibility of incorrect accounts appearing on your report and makes disputing negative marks easier.
Now the credit bureaus will no longer just take the word of a collection agency that you owe a debt, but that agency will be required to provide proof of the debt. Kudos should be given to this attorney general that has not only worked tirelessly for his state but for the entire country. Within this agreement you will no longer have accounts on your credit report regarding parking tickets or fines and the like. These are items that you did not enter into an agreement with another party.
The most valuable part of the agreement, in my opinion, is in regard to medical bills. Medical institutions, doctors, clinics and hospitals can no longer participate in slamming. Slamming is a term from decades ago where telephone companies would add services and costs without the consumers permission. I use it to describe when an institution or entity places a negative item such as a collection on your credit report without sufficient time for you to pay, dispute or negotiate. Often times a covered doctors visit, medical test or procedure is not paid in a timely manner by the insurance company. There are several possible reasons for this such as incorrect billing codes, missing information from the service provider to the insurance provider, lost faxes and the list goes on and on. None of which typically is your fault. The hospital, doctor, medical group, etc. will attempt to collect from the patient the cost knowing full well that the insurance company will eventually pay for the services rendered. If the patient refuses to pay, too often that account is sent to a collection agency and placed on your credit report. This action absolutely negatively affects your credit score and can remain on your report for seven years. The new agreement calls for 180 days before a company can place a medical related item on your credit report. In the attorney generals estimation, this is an appropriate amount of time to allow insurance companies to pay providers. The agreement also states previously paid off medical debts will be removed. Medical debts that currently have a payment arrangement will also be removed. What should you do with this information? Start paying on your medical collections. A whopping 52% of all collections on credit reports are medical in nature with 43 million credit reports containing at least 1 medical collection account according to the Consumer Financial Protection Bureau. The agreement will be implemented over the next several months and more details are to come.
Stay tuned…come back for more great reads about how to manage your credit report. Next up, “What’s on my credit report and what’s not?”