Credit bureau reporting is a good tool but only one of a number of tools for effective debt collection. I think some collection agencies use it in lieu of a consistent effort to reach consumers and work to get them into payment plans. Some creditors have too great an expectation of the effectiveness of credit bureau reporting. Creditors also do not understand the liability that could arise under the Fair Credit Reporting Act (FCRA) if debts are reporting inaccurately. My opinion has long been that the benefits of credit bureau reporting do not outweigh worth the risks involved.
The Consumer Financial Protection Bureau was established in 2012 and part of its mission was to protect consumers from inaccuracies in credit reporting. They have received over 185,000 thousand credit bureau reporting complaints as of February of this year. As a result, the new National Consumer Assistance Plan is an effort by the three major consumer credit bureau reporting agencies – Equifax, Transunion and Experian – to improve accuracy and transparency for consumers. Anyone who is a “data furnisher”, meaning your collection agency, or a creditor who reports debts directly will be subject to new requirements. Some of the changes either already in effect or in the works are:
- Medical debts cannot be reported until 180 days after the date of delinquency. The idea is to that many times, insurance claims are under appeal and take some time to get paid. The new delay hopes to avoid the reporting of debts that eventually get paid by insurance.
- Debts that do not arise from a contract or agreement to pay such as parking or court fines can no longer be reported.
- Full name, address, social security and date of birth will be required for all reported items.
- The name of the original creditor, not simply the collection agency must be reported.
If you wish to continue (or have your collection agency) report debts to the bureaus, you must immediately being collecting key information such as social security and date of birth. A customer application and contract have always been important, but now are even more so.