Equifax Changes Policy on Credit Ratings After Bankruptcy  

December 6th, 2017 by Bunch & Brock

Equifax has been in the news quite a bit as of late, but a recent change in their policy, unrelated to the recent data breach, may have a serious impact on the credit ratings of those who have filed for bankruptcy. By having a better understanding of this change and what it means for those who have filed for Chapter 13 bankruptcy in the past decade, consumers can be better informed and aware of the ever-increasing need for transparency among the major credit-reporting bureaus.

Understanding the Change

Other major credit-reporting bureaus, such as Experian and Transunion, remove the impact of a bankruptcy on one’s credit report after seven years. At this point, the bankruptcy no longer has any impact on the person’s credit, often resulting in a drastic increase to the person’s score. Equifax, for reasons that aren’t fully understood at this time, chose to keep Chapter 13 bankruptcies on a person’s report for 10 years if the consumer failed to complete their bankruptcy plan. This applied even in situations where cases were dismissed.

Recently, however, Equifax altered their policies so that they are in line with those of Experian and Transunion. Chapter 13 bankruptcies will now be automatically removed from a person’s Equifax credit report after seven years.

Effect on Those Who Have Filed for Bankruptcy

So, what does this change mean for those who have filed for Chapter 13 bankruptcy in the past? For starters, those who filed more than seven years ago but less than 10 should now see the bankruptcy flag removed from their credit reports. This will have a positive impact on their credit score. And, of course, with a higher credit score and no bankruptcies to report, consumers have a much easier time getting approved for loans and even leases on cars, apartments, or other rentals. In this sense, the sudden change in Equifax’s policy may have a positive impact on a person’s overall quality of life. This is also true in instances where a credit check may be required as a contingency for employment.

An Increasing Need for Transparency

While this change stands to benefit only those who have filed for Chapter 13 bankruptcy, the unexplained nature in which the change was made also raises some interesting questions and concerns about the need for transparency among the three major credit-reporting bureaus. For starters, many people would like to know why Equifax had the rule in the first place, yet the company has refused to comment on this. They have also refused to explain their reasoning for the rule change.

Currently, there are very few governmental regulations regarding credit reporting by Equifax, Transunion, and Experian in the United States. It seems as though they are more or less given free rein to write their own rules and implement them as they see fit. Furthermore, they are clearly able to change these rules, seemingly on a whim and without the need to explain or defend their actions to the American people. Perhaps what is needed is greater government oversight when it comes to credit reporting companies’ rules and regulations.

If you have filed for bankruptcy and are wondering how this change may affect you specifically, or if you’re interested in finding out more about filing for either Chapter 7 or Chapter 13 bankruptcy in Kentucky, Bunch & Brock Attorneys at Law are here to help. Contact us today to find out more about what we can do for you or to schedule your consultation with us.