New credit rules and how they impact you

Credit is an issue that affects almost everyone. Unless you have the cash to buy critical items like a car or a home, you’re going to need to borrow money. Without a decent credit score, this process can be incredibly costly or even impossible. That’s why it’s important to be aware of updates that happen to the way your credit is reported.

Credit reporting changes are on their way due to a settlement agreement between the New York Attorney General and the 3 major credit bureaus (Transunion, Equifax and Experian). Following suit, 31 more state attorney generals pushed to make these changes nationwide. The following changes will be made by June 8th:

  • Collections that aren’t at least 180 days old will be rejected by the 3 major credit bureaus. You will now have time to pay them off before it is even reported.
  • Medical collections will no longer show on credit reports as long as it is being paid (through either you or insurance)
  • Collection accounts that have not been updated in six months or more will not be factored into scores.
  • Any collection that did not result from a contract or agreement to pay by the consumer, will be removed.
  • Authorized user accounts will not be reported unless the date of birth is provided by the creditor.
  • A consumer’s second dispute of an account can no longer be rejected because of a previous dispute in the last 3 years (unless the dispute is made on behalf of a credit repair company).
  • All of the reporting agencies must communicate information with each other regarding mixed files (multiple socials, names, etc.).

If you have any questions about what this means and how credit reporting can impact your ability to buy a home, click here so that one of our experienced Loan Officers can reach out to you for a free consultation.