Credit Reporting, Debt Consolidation and Mortgages

Unfair Credit Reporting

In 2017 when want to buy a new car, apply for a mortgage or maybe even apply for a new job, you could run into some roadblocks brought up from a debt consolidation that you performed back in 2011. Even though you may have paid your debts off six years ago, they are most likely still showing up on your credit report and while some mortgage lenders can overlook these entries when presented with updated information, some employers and lenders are not as forgiving.

So, even though you have done the right thing and paid off the debts, you are still being punished for something that happened up to seven years ago. Even if you dispute the entries, if the creditor or collector still has the account on file, even if it is paid, they can simply report back to the credit reporting agency that the entry is correct.

Debt Consolidation

This means that millions of Americans that have paid down their debts still suffer lower credit scores for a sentence of up to seven years. The Fair Credit Reporting Act states that in order to have accuracy and fairness of credit reporting that “the banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system.”

Essentially, by keeping these no longer accurate negative credit entries for up to seven years on a consumer’s credit report, falsely represents the actual financial status of the entire country. Those that have repaid their bills may still not be able to participate in fair lending and are subjected to higher interest rates.

FICO

Collection agencies, some being rogue states of the credit industry, in every sense of the term, have the power to crush someone’s credit score, financial health and ultimately their everyday life, even based on an error with a single report to Equifax, TransUnion or Experian. Collection entries in a credit report significantly impact your FICO score right now, but a possibly precedent setting Act is now going before Congress that may finally bring “Fair” to the Fair Credit Act.

Medical Debt Responsibility Act

The Medical Debt Responsibility Act requires that the big three credit reporting agencies wipe out all collection records related to medical billing of $2500 or less after forty-five days of being paid or settled. If this bill becomes law, then it may be possible to make other steps towards applying the same concept to credit debts and other collection fiascoes.

The state of the US economy is greatly dependent on the underplayed, often unrecognized role of the consumer’s credit score. If the consumer has done all that they can to repair their credit, but it is not recognized for a period of seven years or more, that is unfair and will keep the economy in a perpetual depressed state indefinitely. The Consumer Data Industry Association has fought similar legislation in the past, but organizations, collection agencies and the banking industry don’t exactly work for the goals and ultimate good of the consumer do they?

www.ftc.gov/os/statutes/031224fcra.pdf