Alabama's Morning News with JT
Richard Barrington on Credit reports
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Richard, welcome to the show. Oh, thank you for having me on. Let's talk about credit reports. There's a proposal for a new rule that says that they cannot include medical information in your credit score? Yeah. Now, consumers need to be advised. This has gotten a lot of headlines. And so I think consumers need to understand the limitations of it. First of all, as it now stands, this is just a proposal. The CFPB has made this proposal. It's opened it up for comments, and it's receiving comments until August 12th. After that, it'll consider those before it issues its final ruling. So this is going to be a quick fix. It may be different from how it's now proposed. And even if it goes through as written, it still has some limitations in what it will do for you in terms of medical debt. And there's also some concern that it could cause broader problems in terms of credit use. Richard, how does the credit report work in terms of it's not a government thing rather? It's a private organization, I guess probably three private organizations that they come together and they create your or they keep up with your credit history. But sometimes it's not fair. You want to appeal it and it can be kind of daunting to take on Equifax and TransUnion. And there's a third one. I can't remember off the top of my head. Yeah, absolutely. There is a process for it. And each of the three credit bureaus does it outlines for consumers certain procedures you have to follow. But that takes some time to do. I would say though that I would advise everybody to keep a close eye on their credit reports because even apart from medical debt, mistakes do happen. One of the most common ones is duplicate entries on credit reports. Also, a lot of times stuff that you've settled or paid is slow to come off the credit report. So it's very important if you can to sign up for credit monitoring, which is one of the things that credit testing offers. Does credit monitoring, does it cost something or is it something that you can get for free as part of something else? You can get it for free. You can also use it as part of a broader program to get recommendations for specific steps you can take to improve your credit. I've never understood the idea that you go in to buy a car, whatever it is. And they always say, we're going to have to check your credit. This is going to be a hard check and it's going to show up on your credit that if somebody checks your credit, it is like a ding on your credit because somebody looked at your credit. Yeah, and it's only a mild ding, but it's a ding. Here's the idea behind that. If you have one of those hard pulls on your credit report, that's not going to mean much of anything to a potential lender. However, if they look at this and say, hey, this guy has been applying for credit or looking into credit at six different places in the past three months, then they're going to get a little more concerned. That's going to have more of a negative impact on your credit score. And it's not just people where you're seeking a loan or even maybe seeking to rent a apartment or something like that. Employers sometimes, they check your credit to see if your credit worthy, I guess, to also see if that makes you a good employee? Yeah, absolutely. You know, it says something about how well the employee has done it, meeting their obligations in the past, which is something an employer wants to know. The other thing is that when a person has money problems, it's a huge distraction. And so, you know, in some lines of work, you just can't afford distracted employees. And in this day and age, the last thing we need is more distractions. Richard, you said this is a proposal. When will this proposal, a room will this decision be made? You know, that's not clear. They've left the comment period open until August 12th. And then there'll be a process of them, you know, sort of taking into account those comments and possibly revising the rule. I wouldn't be surprised to see some changes to it because it is going to be controversial. As they say, there are potential negative sides to this. Well, this is very well-intentioned because medical debt is a huge problem in this country, but this might not be the right medicine for the problem. Very true. Richard Barrington, a financial analyst with Credit Sesame. Thank you for joining us this morning on Alabama's Morning News. Well, thank you. I have a good day. Hey there. It is Ryan Seacrest with you. You want to make this summer unforgettable? Join me at Chumba Casino. It's this summer's hottest online destination. They are rolling out the red carpet with an amazing welcome offer just for you. 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