How to Report Transactions That Would Affect Someone's Credit

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If you are reporting on a customer's credit behavior to a credit reporting agency (CRA), which the Federal Trade Commission defines as "credit bureaus, tenant screening companies, check verification services, and medical information services," then there are six rules that you must follow to ensure the customer's privacy and the accuracy of the reports. People reporting regularly as part of a business are subject to Rule 2, which is correcting errors and reporting to CRAs, and Rule 5, which is notifying CRAs of voluntarily closed accounts. Occasional reporters are not required to follow these rules.

  • Report accurately and make real efforts to do so (Rule 1). You are not allowed to "consciously avoid knowing" details that might help or hurt the individual's credit rating. The rules state that if you clearly provide an address to which the individual may dispute the information, you are not subject to this rule, but in fact, a later rule gives the customer ways to force you to report the accurate information. Be honest and be ethical.

  • Correct and update information that you find is inaccurate (Rule 2), if you are a regular reporter, by notifying all CRAs to which you have sent the wrong information. Also, do not continue to send the incorrect information. This rule applies only to regular reporters of information.

  • Report only corrected information in the future (Rule 3), if an individual writes to the address that you have furnished, complains and you find out that the complaint is valid. If you report regularly, you also have to follow rule 2, and take the extra step of notifying all CRAs. Furthermore, once a complaint is made, information sent to CRAs must note that there is a dispute

  • Know the time limits (Rule 4). If the customer complains to the CRA about information that you have reported, you must investigate all available information, you must report back to the CRA, and you must correct inaccurate information, if you find any, to all national CRAs. You have 30 days to investigate, and an additional 15 days if in the interval the customer gives you more relevant information. This rule applies to regular, business reporters and to individuals who report to CRAs.

  • Report when a customer closes an account voluntarily as opposed to involuntarily (Rule 5). CRAs often view involuntary account closings negatively, but not voluntary ones.

  • Report delinquent accounts from the date that the account went delinquent, not the date that collection action or other actions took place (Rule 6). If a customer falls behind in October but no measures were taken until December, you should report the October date as the start of the delinquency.

Tips & Warnings

  • Consult with CRAs, the Federal Trade Commission at ftc.gov/bcp/edu/pubs/business/credit/bus33.shtm, and with your lawyer before reporting information.

References

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