In a recent change to your credit report, the three major credit reporting agencies, Equifax, Experian and Trans Union, have amended their reporting to include information regarding your credit card payment history. This change will affect more than 150 million credit card paying consumers. In addition to reporting whether you make timely payments each month, the information reported will detail whether you accumulate interest and finance charges each month, giving current or potential creditors a better picture of whether you may be a credit risk.
The bureaus desire to include what it considers to be valuable information will give creditors a clearer picture of your payment tendencies. Previously, your credit report only showed your card balance, credit limit and whether you made timely payments…..even if it was only the minimum payment, allowing your debt to credit ratio to grow every month. The bureaus plan to now include a two year payment history on their reports detailing the exact amounts you pay each month. The data will show the type of credit card payer you are: a consumer who makes purchases and then pays off entire balances, or a consumer who carries balances and pays hefty interest and finance charges.
Of the three major credit reporting agencies, Equifax will add the payment history sometime in August, Experian has been slowly reporting the detailed account information over the past year and Trans Union began including the information in January of 2013. The credit bureaus feel that this information is necessary to their reporting to give credit card issuers a clearer picture of who they are offering and extending credit to.
The negative effect of reporting this information on consumer reports is the likelihood of error. Reporting detailed monthly payment history provides a greater opportunity for error and like the other information on your report, the information is also subject to the Fair Credit Reporting Act (“FCRA”). The bureaus have decided for now that the information won’t affect your score. In other words, making the minimum payment on your credit card won’t change how the account is factored into your score any more than if you made a larger payment or even paid off the balance in full. After a period of time however this may change as the purpose of a credit score is to determine what type of consumer you are and how likely it is that you will repay your debt.
If you have any questions or concerns relating to your credit report, contact SmithMarco P.C. for a free case review.