The three largest companies to collect and disseminate credit information for millions of Americans – Experian, Equifax and TransUnion – must significantly change the way they treat disputed information on credit reports as part of a massive multi-state settlement announced this week.

The credit reporting agencies (CRAs) entered into a settlement with 31 states attorneys general on Wednesday that requires them to pay $6 million to the states and revamp their business practices including fixing disputed information on credit reports more quickly, waiting longer to add potentially damaging information on medical debt and scrutinizing data furnished by outside entities.

“Today is a good day for all consumers,” Ohio Attorney General Mike DeWine, who led the charge, said in a statement. “We are announcing a comprehensive multi-state settlement that will help protect consumers from credit reports that are wrong, out of date, or even mixed up with someone else’s report, and it will reduce the chance that a consumer is wrongly denied a house loan, a car loan, or even a job, because of an inaccurate credit report.”

The settlement stems from an investigation initiated by DeWine back in 2012. That probe, which covered all 31 states that are part of the agreement, focused on consumer disputes about credit report errors, monitoring and disciplining data furnishers, accuracy in consumer credit reports, and the marketing of credit monitoring products to consumers who call the credit reporting agencies to dispute information on their credit report.

Nevada Attorney General Adam Laxalt said in a statement that the settlement provides protections to consumers nationwide by ensuring that they will have greater control over their financial lives.

“This is a comprehensive settlement that has taken participating states years to negotiate,” he said. “I empathize with those Nevadans who have long struggled with these issues, and am actively working to achieve changes and positive results.”

In all, the agreement requires the three big CRAs to:

• Maintain information about problems with entities that furnish them data and make that information available to states;
• Use a better, more detailed system to share data with furnishers;
• Create an extensive process for complicated disputes involving identity theft, fraud or cases in which two people’s identities have been confused;
• Launch investigations when consumers report mistakes;
• Refrain from peddling fee-based credit-monitoring services or other products until a consumer’s complaint is resolved;
• Educate consumers about how they can further dispute the outcome of an investigation;
• Provide the name of the original creditor when a debt collector seeks to add an unpaid bill to a credit report

Additionally, the CRAs are prohibited from adding information about fines and tickets to a consumer’s report and bans the agencies from including medical debt until 180 days after it is reported, in order to give consumers time to work with hospitals and insurance companies.

When it comes to disputes, the agencies are now required to provide consumers with an extra free credit report in a 12-month period if information they challenged creates a change on their report.

According to DeWine, the changes will be implemented in three phases to allow the agencies to update their IT systems and procedures. All changes must be made by three years and 90 days following the settlement’s effective date.

In addition to Ohio and Nevada, states included in the settlement are Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, and Wisconsin.

The multi-state settlement comes nearly three months after New York Attorney General Eric Schneiderman announced a similar agreement with the same CRAs.

According to that arrangement, over the next three years the Experian, Equifax and Transunion must make nationwide policy changes regarding the ways they handle errors, resolve disputes and list unpaid medical bills.

The three CRAs will now be required to use trained employees to review documentation consumers submit when they believe there is an error in their credit files, even if a creditor says the information is correct.

Attorney General DeWine Announces Major National Settlement with Credit Reporting Agencies [Attorney General Mike DeWine]
Attorney General Laxalt announces $6 million settlement with Credit Reporting Agencies [Nevada Attorney General Adam Paul Laxalt]

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