The nation's three major credit bureaus have reached an agreement with 31 states including Ohio to keep better tabs on companies that frequently err when reporting information about consumers.
The three credit bureaus -- Equifax, Experian and TransUnion -- agreed in March to a nationwide settlement struck with the state of New York to overhaul the way they handle consumer complaints about credit reporting errors.
Today's settlement looks a lot like that one -- with some tweaks.
The New York agreement required the bureaus to actively investigate any disputes that furnishers of payments information can't resolve as well as all disputes involving identity theft or co-mingled files, that occur when the credit bureaus put information about the wrong person on someone else's credit report.
It also required the bureaus to create a plan to monitor furnishers -- the companies that report information to the bureaus. Furnishers include financial companies that report consumers' payments on credit cards and loans to the bureaus, as well as debt collectors.
Today's multistate settlement with the bureaus additionally:
* Requires the bureaus to provide the states with lists of furnishers who most often report information that consumers dispute as inaccurate.
* Bars the bureaus from reporting information about fines and tickets on consumers' credit reports.
* Prohibits the bureaus from trying to sell products to people who call them with disputes.
* Requires debt collectors who report information to the bureaus to provide the name of the original creditor and information about the debt before the information can be added to a consumer's credit report.
* Requires the bureaus to fork over $6 million to the states to cover the costs of an investigation launched in 2012. Ohio's share is about $460,000.
The Consumer Data Industry Association, the trade group that represents the bureaus, made light of the new agreement.
"With the exception of the financial payments the credit reporting agencies are making to the attorneys general to cover the costs of their investigations, consumer education and other purposes, the settlement essentially adopts the plan announced with the New York attorney general," CDIA President Stuart Pratt said in a statement.
New York and the 31 other states began the investigation together, but New York split off in 2013, and in March announced a settlement with the bureaus that covered all consumers in the country.
Ohio Attorney General Mike DeWine said later today that New York's settlement cribbed from work the states did together before the split.
Either way, consumers have a much better shot at getting errors corrected than they did just six months ago.
Errors can have a huge impact on consumers, because banks and insurance companies use a consumer's credit report to determine what rates the consumer will pay -- or whether to conduct business with him or her at all. Moreover, many employers also use credit reports to make decisions about hiring or promoting employees.
More than 25 percent of credit reports contain at least minor errors, according to research by the Federal Trade Commission, and about 5 percent of all consumers -- roughly 10 million people -- have reports that contain an error serious enough to impact their ability to get credit.
Under pressure from the Consumer Financial Protection Bureau, the credit bureaus changed their complaint intake systems to allow consumers to attach documents and to allow the bureaus to electronically forward that documentation to furnishers. That documentation in the past often was never shared by bureaus with the furnishers.
The financial protection bureau last year also put furnishers on notice that it would hold them accountable if they failed to properly investigate and correct errors.
The New York settlement pushed the credit bureaus to take a much more active role in resolving complaints.
Forty percent of consumers who disputed an item on their credit reports said they don't recall ever having heard back from the credit bureau, the FTC found in its research. And 40 percent who apparently lost disputes said they never got an explanation of the credit bureau's decision.
The financial protection bureau announced in December that credit bureaus must begin submitting regular reports identifying items disputed most often, as well as the industries most likely to report disputed information.
Consumers are unlikely to find errors, let alone dispute them, unless they check the accuracy of their credit reports. To do that, use only the free, official service the three bureaus share, annualcreditreport.com or 1-877-322-8228.
Consumers are entitled to a free credit report from each of the three credit bureaus every 12 months.
Consumers who spot a mistake should dispute the error with the bureau the report came from. Those who can't get an error corrected should file a complaint with the CFPB at consumerfinance.gov.
UPDATED WEDNESDAY AT 3:25 P.M.