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FDIC Consumer News - Winter 2018

New Standards for Credit Report Accuracy May Help Consumers

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The three major consumer credit reporting companies — Experian, Equifax and TransUnion — have new standards to enhance the quality of the credit reports they produce. The changes are in response to a 2015 legal settlement requiring action by these companies to reduce errors on credit reports. Incorrect or outdated negative information on a credit report can adversely affect a consumer's ability to borrow money under the most favorable terms, so it is important to make sure the information is correct.

When consumers apply for a loan or a credit card, the lender's approval and interest rate provided are determined in part by information contained in credit reports, as well as credit scores. Credit reports summarize an individual's credit history — for example, how many credit accounts were opened in recent years and whether bills are paid on time. Credit scores are developed by scoring companies, such as FICO (the Fair Isaac Corporation), based on repayment history and other information included in credit reports. The higher a person's credit scores, the more likely he or she is to qualify for credit, rental housing, insurance and, in certain circumstances, employment. That's why it is important that the information in a credit report is complete and accurate.

In response to the settlement in July 2017, Experian, Equifax and TransUnion began removing tax liens (a legal claim on the assets of a delinquent taxpayer) and civil judgment debts (court-ordered payment of damages) from consumer credit reports, if the information is incomplete.

Experian, Equifax and TransUnion also agreed to exclude medical debts on consumer credit reports until such debts are at least 180 days past due. According to a 2014 report by the Consumer Financial Protection Bureau (CFPB), medical debt has been a source of numerous complaints because the billing process can be complicated and confusing. As of September 15, 2017, the new 180-day waiting period gives consumers time to resolve medical billing issues.

What You Can Do

"While the changes in reporting standards can mean that some negative information will be removed from peoples' credit reports, which is beneficial, consumers still need to understand what is on their credit reports and take steps to ensure that they are accurate," said Elizabeth Ortiz, the FDIC's deputy director for consumer and community affairs.

Examples of credit reporting errors may include outdated information, missing loan payments, incorrect Social Security numbers, or reporting on individuals with similar names or addresses.

"Consumers need to understand what is on their credit reports and take steps to ensure that they are accurate," said Elizabeth Ortiz, the FDIC’s deputy director for consumer and community affairs.

What are some simple precautions you can take to build your credit history and preserve good credit scores? In particular, review your credit reports at least once a year to look for discrepancies and errors. "Make sure you're familiar with the information in your credit reports before you apply for a new job or a loan," said Kristin Strong, chief of the FDIC's Consumer Response Center. "Correcting any errors in advance could help you qualify for a better interest rate on a loan and save you from being denied access to credit, employment, housing or even insurance."

It's also important to note that because there are multiple credit scoring models, credit scores may vary. As explained by Heather St. Germain, an FDIC senior consumer affairs specialist: "You can't control which score a lender uses, but you can help produce good scores by having a positive credit history and checking your credit reports often to correct mistakes."

The Fair Credit Reporting Act requires each of the three nationwide credit reporting companies to provide you with a free copy of your credit report once every 12 months, only upon request. To obtain your free credit reports, go to or call toll-free 1-877-322-8228. Note, that unlike credit reports, you may be charged a fee to obtain your credit scores.

Another important reason to check your credit report is to look for possible signs of identity theft or fraud. Warning signs include an unfamiliar credit card or loan listed in your name. The sooner a fraudulent account is identified in your credit report, the sooner you may be able to limit financial harm.

For additional information on credit reports, visit the FDIC's webpage.