As Consumer Credit Tightens Nationwide, New Rules Require Credit Reporting Industry to Clean Up Consumer Credit Files

MarketWatch  
October 1, 2008

Thanks to an injunction imposed by U.S. District Court Judge David Carter, the nation's leading credit bureaus are under order to review customer files for the purpose of correcting and updating information related to Chapter 7 bankruptcy proceedings. The requirement stems from class-action litigation that accuses TransUnion, Equifax, and Experian of violating the Fair Credit Reporting Act by neglecting to follow reasonable procedures for treatment of debts discharged through Chapter 7 bankruptcy. As a result, millions of Americans reportedly have been turned down for home and automobile financing or forced to pay higher interest rates because their credit reports inaccurately represent discharged debt as overdue and unpaid. Effective Oct. 1, 2008, the bureaus not only must take steps to reconcile faulty reports but also adhere to new procedures that ensure that future discharged debt will be handled properly. "Consumer credit is tightening across the nation due to the crisis in the financial industry," according to attorney Michael Sobol of Lieff Cabraser Heimann & Bernstein. "It is more important now than ever that consumer creditworthiness be assessed upon the most accurate information available."

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