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Huge Changes Coming to a Credit Bureau Near You


Huge Changes Coming to a Credit Bureau Near You

Consumers can expect to see major changes in the way that the credit reporting agencies - Equifax, TransUnion, and Experian - handle much of the information on their credit reports and the consumer dispute process in the coming months and years. In fact these changes, brought about as part of a settlement agreement released on March 9, 2015, are so sweeping that they have the potential to lead to higher credit scores for millions of US consumers.  

The settlement came about after New York State Attorney General Eric Schneiderman and his office began investigating the practices of the 3 credit reporting agencies in 2012. While the neither Equifax, TransUnion, nor Experian were actually found to have violated any laws, the 3 credit reporting giants have agreed to a settlement which will implement a very significant overhaul affecting many different credit reporting and consumer dispute policies.

Additionally, the changes will not merely apply to residents of the state of New York but rather will be implemented for consumers nationwide. Without question the settlement marks the most significant change in credit reporting since the Fair and Accurate Credit Transactions Act (FACTA) amendment to the Fair Credit Reporting Act (FCRA) in 2003.  In fact, credit reporting changes of the magnitude included in the settlement agreement generally only come about when mandated by federal law.

The lengthy settlement agreement (a whopping 41 pages long of not-so-light reading) details a massive amount of information regarding the credit reporting practices changes to come. Here are some of the most important highlights.

Time Frame

·        The changes detailed in the agreement will not take place overnight; however, they will be implemented nationwide over the next 6 to 39 months (3.25 years).

Medical Collections

·        According to the agreement unpaid medical collections will not be permitted to be added to a consumer's credit reports for a period of 180 days (approximately 6 months). The change is designed to prevent consumers from having unnecessary derogatory collection accounts added to their credit reports in cases where a medical insurance company is simply dragging its feet to pay a bill - a common occurrence.

·        When a medical collection is paid by an insurance company it must be removed from a consumer's credit reports immediately, regardless of how long it has been there. Previously paid medical collections were permitted to remain on a consumer's credit reports, leading to credit score damage, for 7 years from the date of default on the original account.

More Free Credit Reports for Consumers with Disputes

·        Each credit bureau has also agreed to provide an additional free credit report to consumers who file a dispute using an credit report. Previously, as part of 2003's FACTA, consumers were only entitled to only one from credit report every 12 months via the same website.

Changes to the Dispute Process

·        Perhaps the biggest changes to come about as a result of the settlement are among those involved with the consumer dispute process.

¨      Refusing to Process Disputes - The credit bureaus are no longer permitted to refuse to accept a dispute due to the fact that a consumer has not receive a credit report recently nor for the failure of a consumer to include a credit report identification number with his/her dispute.

¨      Deceased Indicator Changes - When a credit bureau receives a dispute from a consumer than an account on his/her credit report is inaccurately reporting that the consumer is deceased (and the credit bureau's investigation has in fact revealed that the consumer's dispute has merit) the credit bureau must share the information regarding the incorrect "deceased indicator" with the other 2 credit bureaus so that they may remove the indicator as well. (These inaccurate deceased indicators often show up on a consumer's credit reports when they hold a joint account with someone who has passed away.)

¨      Review of Supporting Dispute Documentation Submitted by Consumers - Previously if a consumer filed a dispute with documented proof of a credit reporting inaccuracy the credit bureau would still rely upon the data furnisher (i.e. creditor or collection agency) to review the dispute and determine whether to verify or delete the account. Under the new agreement when a consumer includes documentation to support a dispute and the data furnisher verifies the account as accurate anyway the credit bureau will be required to assign an agent to perform its own investigation, independent of the data furnisher. If the credit bureau agent determines that the consumer's dispute is indeed valid then the agent will have the authority to modify or delete the disputed account.

¨      Escalated Dispute Handling - The credit bureaus will be required to process disputes occurring as a result of fraud, identity theft, and mixed credit files (where the files of 2 consumers are merged into 1) in an escalated manner. Escalated disputes will be handled by specialized groups with experience in these complex dispute situations. 


Michelle Black is leading credit expert with over 13 years of experience, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, and  a regularly featured speaker. She is an expert on credit reporting and scoring, budgeting, and identity theft.


Foreclosure? Bankruptcy? You Might be Able to Purchase a Home Sooner Than You Think


Foreclosure? Bankruptcy? You Might be Able to Purchase a Home Sooner Than You Think

Qualifying for a mortgage loan can be a daunting task, especially for consumers with certain types of credit problems such as bankruptcy, foreclosure, or short sales. Even if a consumer is able to rebuild his credit scores to a high enough level to satisfy a lender after one of these events (no small order), he may still be turned down for a loan until enough time has passed since the derogatory credit event before a lender will approve him for a new mortgage loan. The reason why consumers in these situations can be turned down for a mortgage even if their credit scores meet the minimum score criteria is due to the existence of mandatory waiting periods.

Not sure what your credit reports and scores look like? CLICK HERE.

Normal Waiting Periods

Fannie Mae, the government-sponsored enterprise (GSE) which is the leading source of residential mortgage credit in the United States, is slower to purchase the home loans made by lenders when certain types of credit issues appear on a borrowers' credit reports. These problematic credit issues include bankruptcies, foreclosures, and foreclosure alternatives such as short sales and deeds-in-lieu of foreclosure. When these specific credit issues occur Fannie Mae requires that a mandatory waiting period be instituted so that there is a cooling off period between the time when the major credit issue occurred and when the consumer will be eligible to qualify for a new mortgage loan in the future. Lenders have to abide by the guidelines set forth by Fannie Mae if they want the ability to sell the loans to Fannie Mae instead of being forced to hold the loans on their own personal balance sheets.

Mandatory waiting periods vary based upon both the derogatory credit event which occurred (i.e. bankruptcy, foreclosure, etc.) and the type of loan for which a consumer is applying (i.e. FHA, VA, USDA, or Conventional). If a consumer has a foreclosure on his credit reports, for example, then in many circumstances he could be required to wait up to 3 years before he is eligible to qualify for a new government-backed loan (i.e. FHA, VA, or USDA) and possibly up to 7 years prior to qualifying for a conventional mortgage.

Fannie Mae routinely adjusts mandatory waiting periods for loan programs so it is always best to check with an experienced loan officer to find out the specific wait period required for the mortgage loan program which interests you. Plus your loan officer will be able to help you determine if your situation qualifies for a reduced waiting period based upon certain "extenuating circumstances." (Don't have a loan officer? EMAIL US if you would like a referral to a loan officer we know and trust.)

FHA Back to Work Program - Extenuating Circumstances

HUD's announcement of the new FHA Back to Work Program in 2013 was very good news for consumers who experienced negative "economic events" which lead to a foreclosure, short sale, deed-in-lieu of foreclosure, or had filed for bankruptcy protection from their creditors. Thanks to the program, consumers who find themselves facing one of the situations above may be able to qualify for a new mortgage after a shortened waiting period. Qualified borrowers under the new program could be eligible to receive a new mortgage loan after as little as 1 year has passed since their derogatory credit event.

Who Qualifies?

In order to qualify for the Back to Work program consumers must be able to document the following.

1. Borrower must meet FHA loan requirements for "satisfactory credit."
2. Borrower can document the mortgage or credit problems resulted from a financial hardship.
3. Borrower has re-established a responsible credit history.
4. Borrower has completed HUD-approved housing counseling.

To qualify for the program a consumer must have credit reports and credit scores which meet the minimum requirements for approval set forth by both FHA and the lender. Next, he must be able to provide documented proof (i.e. tax returns) which demonstrates that he experienced an income reduction of 20% or more for a period of at least 6 months which lead to his derogatory credit event (i.e. bankruptcy or foreclosure). He will also need to demonstrate that he has recovered financially from the event as well. Additionally, the consumer will need to have at least a 12 month history of on-time rental payments and a 12 month credit history which is free from late payments as well.

Your Next Step

If you have taken the necessary steps to rebuild your credit after recently experiencing one of the derogatory credit events above, then you may be ready to meet with a loan officer to see if you qualify for a new FHA mortgage loan under the Back to Work Program. (Remember, if you are not already working with a loan officer you can EMAIL US if you would like a referral to a loan officer we know and trust.)

However, if you already know that you credit reports need some work before they will be clean enough to qualify for a mortgage then it is likely best for you to begin by scheduling a no obligation credit analysis with a HOPE4USA credit expert to learn what we can do together to help prepare you for your goal of homeownership.

Michelle Black is an author and a credit expert with over a decade of experience, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, credit reporting, correcting credit errors, budgeting, and recovering from identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here.


Credit Report vs. Credit Score - What's the Difference?


Credit Report vs. Credit Score - What's the Difference?

Credit Reports versus Credit Scores

Let’s face it, for most people the world of credit can be a very confusing place. If you can’t explain the difference between a credit report and a credit score, you are not alone. People often use the terms “credit reports” and “credit scores” as if they were interchangeable. However, credit reports and credit scores are two totally different animals. Here is a crash course in credit terminology to help you make sense of this confusing topic and turn you into the super savvy consumer you always wanted to be.

Credit Reports

There is not merely one, but rather three major credit bureaus who compile data from lenders, credit card companies, collection agencies, public records, etc.  The credit bureaus are Equifax, Trans Union, and Experian. The data is compiled into credit files which are then used to generate credit reports (basically user friendly versions of the credit files themselves). In fact, the credit bureaus compile credit data about millions of consumers and sell credit reports to lenders and directly to consumers themselves.

If you have not checked your credit reports in a while, it is a good idea to do so right away. After all, it is ultimately your responsibility to monitor your credit reports for errors and for fraud. You can access a free copy of each of your credit reports (NOT your credit scores) each year at Credit reports do not exist to judge your credit management history, but rather to simply lay out the facts regarding how well you manage your debts.

Credit Scores

Contrary to popular belief, the credit bureaus themselves do not calculate your credit scores. Where a credit report simply lists a record of your credit management history, a credit score actually exists to evaluate and rate that data into an easy to understand number for lenders. A low number indicates that the consumer has a history of poor credit management. A high number indicates the opposite.

The original and most popular credit scoring model by a huge margin is FICO. In 1989 FICO partnered with Equifax to introduce the first credit bureau FICO risk score. The purpose of a FICO credit score is to predict risk – specifically the risk of the consumer going 90 days late on any account within the next 24 months. Today, FICO builds credit scoring software and installs it on the mainframe of each of the 3 major credit bureaus. The credit bureaus will use FICO’s software to calculate their own credit data and then sells the credit reports with credit scores to lenders. FICO receives a royalty from the credit bureaus for the use of the software.

FICO credit scores range from 300 to 850. If a consumer has a low credit score then the data in the consumer’s credit report indicates that there is a high risk involved with loaning money to that consumer. If a consumer has a high credit score then there is a low risk involved with loaning money to that consumer.

As mentioned above, consumers are currently not entitled via federal law to receive free copies of their credit scores annually. (Note: if you apply for a mortgage then mortgage lenders are required by law to show you all 3 of your credit scores that were pulled for the mortgage application.) Still, there are several places online where you can receive free educational credit scores (not the same scores as the ones used by lenders) or a free score from one of the bureaus individually. You can also view your credit scores, often initially for free, as a benefit of signing up for monthly credit monitoring services. Beware, many monitoring services will only all you to see your credit score from one and not all three of the credit bureaus. CLICK HERE to access a great comparison site where you can check out the benefits of several different credit monitoring services before deciding which option is right for you.


Michelle Black is an 12+ year credit expert with HOPE4USA, the credit blogger at, a recognized credit expert on talk shows and podcasts nationwide, a contributor to the Wealth Section of Fort Mill Magazine, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and recovering from identity theft. You can connect with Michelle on the HOPE Facebook page by clicking here.