Big changes are coming for your credit report—eventually.
New York state Attorney General Eric Schneiderman announced a settlement Monday with the three major credit reporting bureaus, Equifax, Experian and TransUnion. The bureaus have agreed to make several significant changes over how medical debts will be handled and how disputes over information contained in the reports are resolved. Although a New York state investigation spurred the settlement, most changes will be enacted nationwide.
"The nation's largest reporting agencies have a responsibility to investigate and correct errors on consumers' credit reports," said Schneiderman in a statement. "This agreement will reform the entire industry andprovide vital protections for millions of consumers across the country."
Consumer advocates said the pending changes could make it easier for many consumers to improve their credit. "It seems pretty positive for consumers," said Linda Sherry, director of national priorities for advocacy group Consumer-Action.org. "So much stems out of credit reports these days. It's not just credit. A lot of other reputational decisions are made based on the reports."
Don't expect an immediate impact, however. While some provisions could be in place within six months, others will take more than three years. "Nothing is immediate," said John Ulzheimer, president of consumer education for CreditSesame.com. Many of the changes require programming, hiring and staff training on the part of the bureaus. "That's not something you're going to be able to snap your fingers and have happen overnight," he said.
Advocates say the most far-reaching settlement change will require a trained credit bureau agent to handle cases disputed over errors in reported information. A 2013 Federal Trade Commission study found that 20 percent of consumers had an error on their report that could affect their score, and 5 percent had an error significant enough that it could result in their paying higher loan rates.