How to Report Bad Debtor on Credit Report

You can report a bad debt to a consumer's credit report.

Owning or managing a business can be a challenging task. That task becomes even more complicated when your business extends credit to consumers for purchases. Unfortunately, not all of your customers will pay their bills promptly. You need regular payments to keep your business going. If your business files regular reports with the credit bureaus, consumers have a greater incentive to pay their bills. If they do not, you can report the bad debt to the credit bureaus and damage a non-paying customer's credit rating.

Things You'll Need

• Membership ID number
• Credit Time 2000
• E-Oscar

Instructions

1. Request membership into the consumer credit reporting program run by the credit bureaus. Membership itself is free, although there is a $75 fee for a business inspection. Not all businesses are eligible for membership. Eligibility is determined on a case by case basis. Once you are approved, your business will be issued a membership ID number.

2. Purchase credit reporting software. Reports to the credit bureaus cannot be submitted manually. The software required of members changes over time. As of September 2009, the current software used for updating consumer credit reports is Credit Time 2000. Editions of Credit Time 2000 range in price from $250 to $600. The edition you need depends on the size of your business and the volume of customer reports you intend to submit. A yearly fee is required to maintain the software.

3. Download e-Oscar. E-Oscar is a program required by the credit bureaus for all businesses enrolled in the credit reporting program. In the event that a client files a dispute against your business for inaccurate reporting, e-Oscar notifies you. You then have 30 days to provide proof of accurate reporting to the credit bureaus. If you do not, the report disputed by the consumer will be removed from his credit file.

4. Update your customers' payment information regularly. If you end up with a non-paying customer, your Credit Time 2000 software will identify the customer, the debt and each late payment. Bad debts are automatically reported to the credit bureau whose membership program you are a part of. You must keep your payment information updated within the program to ensure accurate reporting takes place. You must also include your membership ID number when sending reports.

5. Maintain your business status. If you lose your business or the business is sold, the credit bureaus will not be able to thoroughly investigate any consumer disputes levied against the accuracy of reports you previously filed. If an account cannot be verified, the credit bureaus will remove it from the debtor's credit report.

References

• Chris H.; Client Services Representative at Experian
• Fair Credit Reporting Act (section 605)

Resources

• E-Oscar
• Credit Time 2000