What’s New With Credit Reports?
This could be a good WebQuest activity as it involves reading and interpreting articles focused on how regulations surrounding credit reports are changing. Ask your students to find 3-4 sources about changes that have recently been announced with credit reports. Here are some key questions for them to answer:
- What are the details about credit report changes?
- For each of the changes announced, who will benefit from it?
- What are key credit report terms that you found in these articles?
Thirty-one states reached a settlement with the three major credit-reporting firms— Equifax Information Services LLC, Experian Information Solutions Inc. and TransUnion LLC—requiring changes to the way the companies handle the data they maintain on consumers’ debts and repayment practices. The agreement was announced Wednesday afternoon.
Most significantly, the credit-reporting firms will have to provide the participating states with the names of lenders and other companies that consistently provide erroneous information about consumers. The states will be able to request this information on a continuing basis and when they see a jump in consumer complaints about wrong information on credit reports or other red flags, according to the settlement. The state attorneys general could then investigate those firms and take legal action if they deem it appropriate.
Who will these new regulations help? From CBS News:
“This settlement should help three sets of consumers in particular: Those who have medical bills and are waiting for insurance to process them, consumers who may not even realize they have unpaid fines or tickets until their credit reports have been damaged by collection accounts [Editor’s note: This one got me and cost me a lot of points on my credit score!], and consumers with collection accounts and don’t know why,” Detweiler wrote. “But it won’t solve every consumer problem. And, of course, consumers can’t dispute a mistake if they don’t know about it. So it’s still crucial that everyone reviews their credit reports at least once a year for accuracy.”
What are additional details about the changes that are coming?
The agreement requires agencies to:
— Maintain information about problems with entities that furnish them data — such as collection agencies, department stores or banks — and make that information available to states so patterns can be spotted;
— Use a better, more detailed system to share data with those so-called furnishers;
— Set up a more intensive process for complicated disputes, such as those involving identity theft, fraud or mixed credit files in which two people’s identities have been confused;
— Educate consumers about how they can further dispute the outcome of an investigation.
Most of the articles that came out touted the fact that these changes were intended to help consumers. By reading these articles, students become more familiar with the key credit report terms and the challenges that often arise from these reports (inaccuracies, medical debt issues, identity theft, resolution of errors).
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.