Reporting Credit Card Delinquencies: 10 Red Flags to Watch For

Elye Sackmary

We all know that reporting delinquencies to credit reporting agencies (CRA) is a great way to get an individual’s attention. The delinquency will most often appear as a key derogatory item on a credit report, lowering the FICO score, and this may cause the individual to pay higher interest or render them ineligible for extensions of credit or loans until the matter is resolved. And with hundreds, thousands, or more accounts reported to the CRAs each month, it becomes easy to overlook our own obligations with respect to every single account we’re reporting.

The Fair Credit Reporting Act (FCRA) [15 U.S.C. § 1681s-2] governs much of how and when we, as data furnishers within the ARM industry, are to report information and process disputes regarding the accuracy of the information reported. Below are ten red flags to watch out for in regard to credit reporting procedures.

1. Reporting information that is known to be inaccurate
2. Reporting information that your company has reason to believe ‘may’ be inaccurate. In this case, the accuracy must be investigated prior to being reported to the CRAs. (e.g. A system error within your firm which could have incorrectly populated account information would merit an investigation prior to sending the data to the CRAs)
3. Not reporting updates to account status to the CRAs (such as payments in full, settlements in full, etc.)
4. Not reporting account updates to all CRAs to which your company furnished the original information (e.g., informing Experian of a paid in full status but not informing Trans Union even though both received information regarding the original delinquency)
5. Refreshing status dates (FCRA requires CRAs to purge accounts with a status date older than 7 years for most types of debt. Changing status dates (the date upon which the delinquency occurred on the account) prevents the CRAs from enforcing this rule and is a significant violation of the FCRA
6. Failure to notify CRAs that an account is in dispute (whether that dispute is received verbally or in writing)
7. Failure to send a letter to a customer to explain the results of the dispute investigation (even if it was resolved in their favor – As per the Fair Debt Collections Practices Act (FDCPA))
8. Continuing to report account information to the CRAs after receiving notification from the CRAs that the customer submitted an identity theft report (or if your company receives that report from the customer directly)
9. Deeming a dispute as ‘frivolous’ because the customer previously submitted a dispute that proved to be unfounded (the dispute should still be thoroughly reviewed to determine if the customer included information that they did not submit the first time)
10. Not being aware of applicable state laws regarding credit bureau reporting

Elye C. Sackmary is Vice President of Operations at Gila, LLC where he has helped the company grow more than 300% since he joined the team in early 2004. He received a Bachelor’s of Applied Arts and Sciences from Texas State University at San Marcos, has graduated with Great Distinction from BAI Graduate School of Retail Banking, and has been recognized as a Certified Public Manager by Texas Governor Rick Perry. He is currently pursuing a Master’s of Science of Accounting and Information Technology also from Texas State.