In July 2022, significant changes to credit reporting cane into effect in the United States. These changes will impact millions of consumers, lenders, and credit bureaus. In this blog, Karina Lucid, New Jersey Bankruptcy Attorney, will explore what these changes are, why they are being implemented, and how they will affect you.
What are the changes?
The changes to credit reporting in July 2022 relate to the information that is reported and how it is reported. The main changes include:
- Medical debt: Medical debt will no longer be reported on credit reports until it is at least 180 days past due. This change is designed to give consumers more time to deal with medical bills and reduce the impact of medical debt on credit scores.
- Tax liens and civil judgments: Tax liens and civil judgments will no longer be reported on credit reports. This change is due to concerns about accuracy and completeness of these records and the potential for errors.
- Rental payments: Rental payments will be included in credit reports. This change is designed to help people with limited credit histories establish credit and improve credit scores.
Why are the changes being made?
The changes to credit reporting are being made to address some of the problems that have been identified with the current system. The way the system was has been criticized for being too complex, too difficult to understand, and too reliant on outdated information. The changes are designed to make credit reporting more accurate, more transparent, and more consumer-friendly.
For example, the change to reporting medical debt is designed to give people more time to deal with medical bills before they impact their credit scores. This change recognizes the unique challenges that people face when dealing with medical debt and the importance of providing them with support and flexibility.
The change to including rental payments in credit reports is designed to help people with limited credit histories establish credit and improve their credit scores. This change recognizes the importance of rental payments as a measure of creditworthiness and the need to provide people with more ways to establish and improve their credit.
How will the changes affect you?
The changes to credit reporting in July 2022 are likely to have a significant impact on consumers. Here are some of the ways that the changes may affect you:
- Medical debt: If you have medical debt, you will have more time to deal with it before it impacts your credit score. This means that you may be able to work out a payment plan or negotiate a settlement before it becomes a problem.
- Tax liens and civil judgments: If you have a tax lien or civil judgment on your credit report, it will be removed. This may improve your credit score, but it is important to note that other factors will still be taken into account when calculating your score.
- Rental payments: If you have a history of on-time rental payments, this will now be included in your credit report. This may improve your credit score and make it easier for you to get approved for loans or credit cards.
Overall, the changes to credit reporting in July 2022 are designed to make credit reporting more accurate, more transparent, and more consumer-friendly. While these changes may have some short-term impacts, they are ultimately designed to help consumers establish and maintain good credit and achieve their financial goals.