Important Notice: Changes to Credit Reporting

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Collection agencies use many tools on your behalf to recover monies that are rightfully yours. We use the power of our names – no one likes to have a debit in collections. We invest in state-of-the-art tools and databases to locate people for you and to determine whether a person might have assets available to pay you. We use all the power of the Courts when it is necessary and appropriate. We also utilize the power of the Credit Bureaus. Here at American Collection Systems, Inc., we report your debt, with your permission of course, to all three national Credit Bureaus – TransUnion, EquiFax, and Experian. Reporting to the Credit Bureaus is often a long term tool that impacts a person’s credit and applies pressure to pay. Reporting your debts to the Credit Bureaus may increase recovery by a third or more.

Recently, more than 30 State Attorneys General reached a settlement agreement with the Credit Bureaus. This settlement did not change the law but it did create some reform within the industry. This inspired some changes to the way we report and the information we need from you to ensure that your accounts are listed using this critical recovery tool.

Some of the changes that may affect you are listed below:

  1. The Credit Bureaus will no longer allow accounts to be listed for consumers unless there is a contract or an agreement to pay. We aren’t exactly sure how this will be enforced, but it is certainly time for us all to refine our business practices to ensure that we do all that is in our power to procure a signed contract or agreement. Most of you already do this, but there are some circumstances and some businesses where this is more difficult. If you want to avail yourself to this tool, it is time to evaluate your business practices and make sure you are doing all you can to get these agreements in place and delivered to us when it comes time to collect.
  2. The Credit Bureaus are requiring that accounts with balances be updated periodically (possibly every six months) with current information or they will be deleted. The good news is that this will generate more activity on a consumer’s credit report. It will be a constant reminder to them of their debt and will, in our opinion, lead to an increase in recovery. The bad news is that it will most likely increase the number of disputes and complaints. Some of these complaints may be reported directly to you as the creditors. Depending on how you record these collection accounts in your systems, this may require you to evaluate your procedures to handle an influx of calls from consumers. Our advice is that you stand firm in the face of these complaints and trust your Collection Agency to manage these complaints to your benefit.
  3. Medical debts cannot be reported until 180 days after the date of their delinquency. This should not create a hardship, but it does require good communication between you and your Collection Agency to make sure we interpret these dates accurately.
  4. Medical debts that are paid in full by insurance or are being paid by insurance must be repressed or removed. This will require a change in the way we report payments. It is now important that we track collection accounts that are paid in full by insurance. It is unclear if the consumer will have to provide any proof that insurance will pay or has paid. It is clear that we will need to know when insurance is involved in paying an account or part of an account after it has been listed as a collection account.
  5. For all accounts listed with the Credit Bureaus, data furnished must provide date of birth in the format of Month/Year, or the accounts will be removed from the consumer’s report. Most Medical clients provide this information. Most other businesses do not. Now is the time to review your procedures for obtaining good information from your consumers so we can recovery debts from them in the future if needed.

Most of these changes will be staggered over the next three years. Don’t get caught unprepared, and make those changes now. If you have any questions or need assistance in developing a plan, please call us. We would be happy to help.