Credit Reporting Firms’ Changes are Boosting Credit Scores
Attorneys general in various states sued the Big 3 credit reporting agencies beginning in 2015 alleging their reports included misleading information. The lawsuits were settled and the agencies agreed that they would not report a collection account when it was the only one on a person’s report. They also agreed to remove non-loan items that had been sent to collection firms such as gym memberships, library fines, and traffic tickets. They also agreed they would not report medical debt that had been paid by insurance. Beginning in 2017, the Big 3 began removing tax-lien and civil-judgment data. Earlier this year, they agreed to stop reporting new tax lien information.
The majority of persons who benefited from these changes had low credit scores; nearly 80% of the affected people had scores below 660 before the collections were removed. Persons who had at least one collection account removed from their files experienced an 11-point increase, on average, in their credit scores. This information was reported today by the Wall Street Journal.