Texas Attorney General Ken Paxton today announced a major settlement with three national credit reporting agencies Equifax Information Services LLC, Experian Information Solutions Inc., and TransUnion LLC that will increase the accuracy of consumer credit reports. The settlement, approved today by a Travis County District Court, was part of a 31 state effort in which the credit reporting agencies also agreed to pay the participating states $6 million and make a number of changes to their business practices to benefit consumers.

“This settlement elevates standards placed on credit reporting agencies, which will provide greater protections for consumers in Texas and nationwide,” Attorney General Paxton said. “A good credit rating is an increasingly important piece of people’s lives, and the results of this effort will give consumers greater assurance that their score is a fair and accurate reflection of their financial health.”

Initiated in 2012 by Ohio Attorney General Mike DeWine, this multistate investigation focused on consumer disputes regarding credit report errors, the monitoring and disciplining of credit report information providers, accuracy in consumer credit reports, and the marketing of credit monitoring products to consumers when they called credit reporting agencies to dispute their reports. 

Under the settlement, the credit reporting agencies will increase monitoring of data furnishers, require additional information from furnishers of certain types of data, limit direct-to-consumer marketing, provide greater protections for consumers who dispute information on their credit reports, limit certain information that can be added to a credit report, provide additional consumer education, and comply with state and federal laws, including the Fair Credit Reporting Act.

The changes required under the settlement will be implemented in three phases to allow the credit reporting agencies to update their IT systems and their procedures with data furnishers. All changes must be completed within three years and 90 days following the settlement’s effective date.

Key Provisions of the Settlement

Higher standards for data furnishers:

  • The credit reporting agencies must maintain information about problem data furnishers and provide a list of those furnishers to the states upon request.
  • The credit reporting agencies and data furnishers must use a better, more detailed system to share data.

Limits to direct-to-consumer marketing:

  • The credit reporting agencies cannot market credit monitoring services to a consumer during a dispute phone call until the dispute portion of the call has ended.
  • The credit reporting agencies must tell consumers that purchasing a product is not a requirement for disputing information on their credits reports.

Added protections for consumers who dispute credit reporting information:

  • The credit reporting agencies must implement an escalated process for handling complicated disputes –  such as those involving identity theft, fraud, or mixed files — where one consumer’s information is mixed with another’s.
  • Each credit reporting agency must notify the other agencies if it finds that one consumer’s information has been mixed with another’s.
  • When consumers initiate disputes, the credit reporting agencies must send a consumer’s supporting documents to the data furnisher. (The credit reporting agencies implemented this change after the attorneys general initiated their investigation and raised the concern that the pertinent complaint documents were not being sent to the furnishers.)
  • Consumers may obtain one additional free credit report in a 12-month period if they dispute information on their credit report and a change is made as a result of the dispute.

Limits to certain information that can be added to a consumer’s credit report:

  • The credit reporting agencies are generally prohibited from adding information about fines and tickets to credit reports.
  • The credit reporting agencies cannot place medical debt on a credit report until 180 days after the account is reported to the credit reporting agency, giving consumers time to work out issues with their insurance companies.

The credit reporting agencies must require debt collectors to provide the original creditor’s name and information about the debt before the debt information can be added to a credit report. Additional consumer education:

  • The credit reporting agencies must tell consumers how they can further dispute the outcome of an investigation into a dispute, such as by filing a complaint with other agencies.
  • Each credit reporting agency must provide a link to its online dispute website on the website www.annualcreditreport.com, and the credit reporting agency’s dispute website must be free of ads and any marketing offers.

Participating in the settlement are the attorneys general from the states of: Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, and Wisconsin.