The National Consumer Assistance Plan is an initiative launched by the three nationwide consumer credit reporting companies – Equifax, Experian, and TransUnion – to make credit reports more accurate and make it easier for consumers to correct any errors on their credit reports.
Under the plan, which was launched in March 2015, the three companies are taking a number of steps to improve data accuracy and quality and make it easier for consumers to understand their credit information.
The companies are implementing the plan over a three year period with full implementation of the plan expected by March 2018.
Highlights of this new plan include:
- A free annual report so consumers can review for accuracy and disputes
- Medical debts will not be reported until after 180 days to allow for insurance payments
- Non-contract debts, e.g. tickets, court fines, etc., will not be reported
- Tax liens and civil judgments will no longer be reported
- Victims of fraud and identity theft will receive special assistance, information, and attention.
In addition, the 3 repositories will be working together to establish a National Credit Reporting Working Group to review, establish, and update best practices.
All reporting entities will be required to use a common, most current, reporting format created by the repositories. They must carefully monitor all data providers for strict adherence to all announced reporting requirements. Additionally, they must take corrective action against any that fail to comply.
This looks to be a good thing for both consumers and lenders as the credit information reported and relied on for lending should be more accurate and up to date. Credit scores seem to be increasing as a result of the addition of previously omitted information.
However, lenders may initially be put at additional risk for not having a complete credit picture when it comes to validating derogatory credit. This may occur as a result of the changes in reporting regarding unpaid medical bills, tax liens, and /or valid civil judgments outstanding against a consumer.
Since the agencies require a lender to determine any outstanding debt obligations not reported by the consumer, or the credit report, lenders will need to find additional resources to validate any debts outstanding that are not reported under the new plan. Don’t worry, I’m sure the repositories and credit reporting agencies will come up with such a report at an additional cost to lenders.
You can get more information about the plan and the consumer benefits at NCAP. Now, you are informed…be prepared.