What are Some Recent Changes in Credit Reporting that Consumers Should Understand

Few people take the time to keep up-to-date in changes that affect their credit score. Many people will not bother to check their credit report regularly to check for errors. There have been some changes for how the reporting of credit affects an individual’s credit score.

Rental History

A new development for credit reporting in 2013 is tracking or rental payments. Previously the payment for a mortgage way included on a credit report. Bank and mortgage lenders would send information for an individual’s payment history to credit bureaus. Monthly rent and other non-traditional payments will not be used as a factor for calculating a credit score. This means that renters now need to make sure the payment each month is on time.

Payday Loans

There are short-term loans that can be obtained online or from a local payday lender. This is a loan that can be used to make an unexpected payment or any other purpose. The loan is typically paid back on the next payday for the borrower. This is another type of non-traditional loan that is not being tracked on an individual’s credit report. Many other transactions once been under the radar, such as rent-to-own deals and debt settlements are now included in credit score calculations. One thing that this change can do to people is prevent them from withholding payment because of a dispute with a lender.

Better Regulation

The days of fleecing people with arbitrary loan terms and other sneaky methods are becoming less and less common due to increasing regulation. Credit bureaus and many other financial institutions are now under the watchful eye of the Consumer Financial Protection Bureau. Crediting reporting agencies will now have their business practices monitored. New regulations that could be imposed by the bureau can ultimately allow consumers to get mistakes fixed more easily.

Credit Cards

Individual’s with “insufficient income” may be rejected for a credit card. This includes anyone who has recently been divorced or has retired. Provisions in the Credit Card Act of 2009 has made getting credit harder for nonworking individuals. The new law for 2013 means an application for a credit card cannot be based on combined income. If individual’s do not have sufficient income, then an application for the use of a credit card may be denied. People who are also being negatively affected include students who do not currently have any credit history. The problem with this law is that people with no credit history are deemed to be the same risk as people with bad credit. A new rule is set for 2013 to fix many unintended consequences of the Credit Card Act.

Individuals who want to check their credit report can do so for free once each year. This can be done by ordering a report from AnnualCreditReport. If individuals want to track their report throughout the year, then one report will need to be ordered every four months.