National Consumer Assistance Plan (NCAP)

While many times it may feel like Credit Reporting Agencies (CRA) neglect to maintain accurate reports, it is actually in their best interest to ensure that credit is being reported accurately. CRAs make money by selling your information to potential lenders, employers and creditors. If they were to gain a reputation for inaccurate information, they could lose the confidence of their customers. It is with everyone's best interest that the three major credit bureaus reformed their policies by creating the National Consumer Assistance Plan ("NCAP"). The NCAP improved upon the current credit reporting procedure as outlined in the Fair Credit Reporting Act through the introduction of a series of new policies and procedures.

The first major change introduced in the NCAP, is in how Medical Collections are processed. When a consumer would receive medical treatment they would initially take on the cost of the treatment and then file the cost of their treatment through their insurance. In many instances CRAs could process this debt right away and as such the debt could be listed as a bad debt on a credit report. Even after the debt would be resolved with the consumers, the negative information could stay on the consumer’s credit report for up to 7 years. In order to prevent this process from continuing, NCAP implemented a 180 day waiting period to give time for any medical debt to be cleared with a consumer’s medical insurance. This procedure helps protect consumers from having their credit reports getting hit with negative information that should never have been listed in the first place.

Another major change implemented by the NCAP is in regards to what debts can be eligible for credit reporting. In the past, credit reports have been surmised of any outstanding debts a person has. This would include loans, mortgages, and credit card debts as well as Government fines and tickets. As part of the NCAP, the credit bureaus determined that a credit score should only reflect history with debts that were entered into voluntarily, such as a contract with a credit card company. Through this change, debts that were incurred involuntarily, such as traffic tickets or other forms of government fines and fees will be precluded from being listed.

Fixing Bad Credit Scores

The last major changes enacted by the NCAP are designed to improve the dispute resolution process. Credit reporting agencies create credit reports for millions of people across the country, and as a result, it is not uncommon to find mistakes and outdated adverse items on credit reports. Consequently, this can cause an unjustified bad credit score due to the false information.The fair credit reporting act (FCRA) provides for a process whereby disputes can be submitted to the credit bureaus and the credit reporting errors can be fixed.

However, under the NCAP, the rights provided under FCRA have been extended even further. For example, if a dispute is filed and the CRA validated the information, then the consumer will be entitled to a second free credit report. The reason for granting a second Credit report is to enable you the consumer the ability to check and see that any confirmed false information has been removed from your report. Alternatively, in cases where an investigation results that the claims are invalid, the credit bureau will provide additional information as to how to submit a further dispute.

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