Understanding the New Credit Reporting Rules

ID-100211568As of 12 March 2014 the Privacy Act made some significant changes on consumer credit reports that effect what is on your report, how it can be used, and how to challenge incorrect entries. These changes are intended to make your information more secure and make it easier to make corrections on your report so that creditors can make good lending decisions with better information.

Although most of the information collected has not changed there is one positive change. Now credit reporting bodies include your positive repayment history. Before this, the information collected was only negative information such as defaults, overdue payments, and serious credit infringements.
Let’s look at these changes and how you can use them to your advantage. You will also learn about how one big change that may create more headaches if you don’t take care of your bills properly.

Changes on Defaults and Overdue Payment Information
Creditors now must give notice to consumers before listing defaults on your credit report, thus allowing you the opportunity to know what is happening in real time and possibly correct the problem with the creditor to avoid the negative mark on your report.
This is the big change that can create headaches: Late payments of more than 5 days will be on your report right away. You will need to find ways to assure you will never be late on any of your bills. Talk to your financial institution or check out their website for bill payment methods.

21 day Identity Theft Ban
If you suspect you’re a victim you can create a report about it. Once the report is in place credit reporting bodies are banned from releasing your information for 21 days. During that 21 day period they must also ask you for written permission to release any information, even to investigators who are looking into your identity theft report.

Changes for Direct Marketers
Credit providers are no longer allowed to see your credit report simply to send you their marketing material. However, they are allowed to use your credit report to pre-screen you for eligibility for their products and services. You can counter this exception by telling credit reporters you do not want your information shared for pre-screening purposes.

Dispute errors on your Credit Report
You now have a proactive means to dispute errors on your report. Before the changes you had to prove your case before the error would be removed. Now the credit provider or credit reporting body must prove they are correct. If they cannot prove the disputed item is correct they must remove the error at no cost to you.
How do these changes help you?

These changes have been made to help you get a better handle on your report. You can now:
– Have better control of the information in your credit report
– Improved chance to gain better credit and loan terms
– Help you make better financial decisions regarding what you can afford
– Force credit providers and reporters to fix errors at no cost

How do these changes help your creditors?
Your lenders and creditors are in the business to help people afford the things they want and need. They do so at considerable financial risk. These changes help creditors:
– Get better information to make better lending decisions
– Provide better terms or more credit to eligible consumers
– Make access to credit fairer for all consumers, even low-income earners.

In addition to the above learn about other areas of your life which can be affected by credit.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

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