One of the questions most asked of BYL Collections during onboarding of new accounts is regarding credit bureau reporting. Obviously, our credit and collections clients understand how credit bureau reporting may actually prompt a call or payment from a customer. When we take on the responsibility of recovery of an account, we also plan to report the bad debt to the credit bureaus. To facilitate that reporting, however, our clients must have supplied us with the information that the credit bureaus require.
REQUIREMENTS FOR REPORTING Delinquent ACCOUNTS TO CREDIT BUREAUS.
Credit Bureau Reporting & Accuracy
When an individual is seeking credit for a loan, credit card, mortgage, or other financing, the creditor will run a credit report for the consumer. Sometimes, the consumer is unaware of outstanding debt on his credit report and will want to pay off the debt. If the consumer has outstanding or bad debt on his credit report, he may be prompted to call the creditor and/or make a payment to positively affect his credit rating. Collection agencies also report bad debts to credit bureaus as they may initiate inbound calls from consumers who monitor their credit. Individuals who take advantage of the free annual credit report due to them may wish to increase their credit rating as well.
Consumers' credit accuracy is protected under the Fair Credit Reporting Act where consumers have the ability to dispute mistakes on their credit reports. In 2015, the top three credit bureaus, Equifax, Experian, and TransUnion, created an initiative called the National Consumer Assistance Plan to help make this process easier. Under the National Consumer Assistance Plan, the credit bureaus have enhanced their ability to collect complete and accurate consumer information and seek to provide consumers more transparency when interacting with consumer reporting agencies, such as debt collection agencies, about their credit reports.
Information Required to Report Delinquent Accounts
The National Consumer Assistance Plan also has requirements for data furnishers or those who are reporting to the credit bureaus. The mandatory data requirements are to ensure that the debt reported is correctly matched to the individual. Ensuring a correct match reduces the likelihood of false or inaccurate data reporting.
To report a consumer's debt to the three major credit bureaus, the following information is required:
- Full Name (First, Middle, Last, and Suffix)
- Full Address
- Full Social Security Number, or
- Date of Birth (MM/DD/YYYY)
- Date of Delinquency
Note: If the full Social Security number is unavailable, the creditor must also supply the full date of birth.
The Fair Credit Reporting Act excludes from Consumer Reports, accounts placed for collection or charged to profit or loss whose delinquency date predates the consumer report by more than seven years. The seven year period begins upon the expiration of a 180 day period beginning on the date of delinquency of the account. The date of delinquency then, determines how long the consumer debt can be reported on a consumer’s credit report. The date of delinquency occurs on the date when the first payment is missed regardless of how long after the delinquency the creditor charges off the account to profit or loss or places the account with a collection agency. The date of delinquency remains fixed until the account balance is paid in full. This date of delinquency therefore, remains even when the debt is placed with a collection agency, assigned or sold. Neither the Charged Off date nor the date when the account is placed with a collection agency can be used as the date of delinquency on an account.
Responsibility of Creditors
Creditors need to be aware of these data requirements for credit bureau reporting. This may obligate creditors to ask for more detailed information than they would otherwise need. Creditors may need to create a balance when requiring the divulgence of this information. Asking for personal identifying information could affect the ability to make a sale so criteria may need to be defined.
Creditors will also have personal identifiable information (PII) on their customers and will subsequently be held responsible for storing this data securely. If you are a creditor and have any questions regarding the requirements of reporting delinquent accounts to credit bureaus or collection agency reporting procedures, please let us know.
Disclaimer: The information communicated in this article should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its author(s) and/or the BYL Companies. The information in this article is not intended as a definitive statement on the subject addressed. Rather, the information is intended to serve as a tool providing practical advice and references for the readers.