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Fair Credit Reporting: 6.3.3.3.3 Account-level information

The furnisher fills in enough fields about the transaction or account to describe it in some detail. In addition to the account number, information is requested about the date of the transaction, credit limits and loan amounts, and payment schedules and amounts. ECOA117 codes are used to report the status of the consumer in relation to the transaction, for example, whether the consumer is jointly or individually liable.118

Fair Credit Reporting: 6.3.3.3.4 Payment history, account status, and special comment codes

The most critical part of the base segment is information about the account status121 and the consumer’s payment history.122 This kind of information is familiar to anyone who has reviewed a typical consumer report. As might be expected, data is collected on payments received during the reporting period, a twenty-four-month history of payments (or nonpayments), current balance, date of last payment, amount past due, charge-off amount, and date closed.

Fair Credit Reporting: 6.3.3.3.5 Compliance condition codes

Compliance condition fields are used to ensure that various statutory requirements are met.128 One of the most important compliance fields requires the furnisher to indicate the date of the first delinquency that led to the reporting of a delinquent account.129 The FCRA generally prohibits CRAs from including debts more than seven years old from date of default (not charge-off) in consumer reports.130 Without this information from the creditors, CR

Fair Credit Reporting: 6.3.3.4 Associated Consumers Segment Has Information on Joint Debtors and Other Authorized Users of Credit

The Metro 2 base segment includes a fairly detailed identification of the main consumer, i.e., the consumer primarily responsible for the debt. The two J segments capture identifying information about additional consumers who are or may become obligated on the same debt.134 Frequently more than one consumer may be obligated on a single transaction or share some of its benefits.

Fair Credit Reporting: 6.3.3.5 Transfers of Accounts Segment Tracks Holders of Debt

Consumer accounts are often transferred from one party to another. Delinquent debts are commonly transferred to debt collectors for collection or sold to debt buyers. Also common is the sale of entire portfolios (groups) of debts from one creditor to another. These sales routinely occur with mortgages but occur with non-mortgage consumer credit transactions as well. Segments K1 and K2 identify these transfers.136

Fair Credit Reporting: 6.3.3.6 Other Metro 2 Segments Serve Specialized Purposes

The remaining Metro 2 segments are short and specialized and used only as applicable. Segment K3,140 mortgage information, indicates when a secondary market agency has an interest in the mortgage and helps track so-called Mortgage Identification Numbers (MINs), which indicate that the mortgage is registered with the Mortgage Electronic Registration System (MERS) used to track mortgage ownership rights.

Fair Credit Reporting: 6.3.3.7 Reporting of Late Payments

The Metro 2 format specifies that a furnisher should only report a delinquency if there is no payment received within thirty days after the payment due date. At that point, the Account Status (field 17A) will be changed from “11” meaning “0–29 days past due date” (i.e. current) to “71” meaning “30–59 days past due date.”144 If the payment continues to be late, it can be reported as “78” (60–69 days past due), “80” (90–119 days past due) and so on.145

Fair Credit Reporting: 6.3.3.8.2 Account Opening Date

The Account Opening Date is base segment, field 10. Frequently, this date makes the account look more recent that it actually is. The Metro 2 format requires the original creditor to report the date opened as the original date the account was opened. However, if a collection agency or purchaser begins reporting the debt, the account opening date is the date the account was placed or assigned to the third-party collection agency.158 Thus, the account can appear as a newer account.

Fair Credit Reporting: 6.3.3.8.3 Incorrect status codes

The Metro 2 format allows the furnisher to provide in base segment, field 17A, the current status of the reported account based on a series of standardized codes. There are many codes that can be reported generally to reflect the account status. Many furnishers’ data entry employees are not well trained in the variety of entries that can be made and therefore use an inapplicable code that incorrectly describes the consumer’s precise circumstances.

Fair Credit Reporting: 6.3.3.9.1 Debt collectors as furnishers

Many debts are collected by someone other than the creditor. The debt may be assigned or sold to a debt collection agency or to an attorney. A factoring company is an old-fashioned term, still used on occasion, for one who purchases debts with the intention of collecting amounts owed. In most instances these debt collectors will be covered by the Fair Debt Collection Practices Act (FDCPA)161 and various state laws.162

Fair Credit Reporting: 6.3.3.9.3 Special industry guidance for debt collection

Debt collectors, like other furnishers, are expected to fully fill in all appropriate segments and fields in the Metro 2 format such as identifying information and payment histories. Metro 2 materials provide additional instructions to collectors to ensure that accurate information is furnished and to avoid common errors.171 In litigation against a collector as a furnisher of information under the FCRA, the consumer’s counsel may wish to discover what instructions have in fact been provided to the collector.

Fair Credit Reporting: 6.3.3.9.4 Information about the original creditor and preventing duplicate accounts

The debt collector should report the name of the original creditor and the type of creditor involved. This information is furnished in the K1 segment. One purpose of this Metro 2 requirement is to identify the original creditor in the consumer report. Absent this information, a consumer may be unable to identify the source of the debt or to understand just what is being included in the consumer report.174 Often, the consumer will not recognize the name of the collector alone.

Fair Credit Reporting: 6.3.3.9.5 Information about consumers

The collector should, of course, distinguish between the primary consumer and any secondary consumer,178 but normally would not furnish information on authorized users on a credit card account, because authorized user status by itself does not create contractual liability.179 As a result, when a collector classifies a consumer as an authorized user, the CRA is then on notice that, absent other information, it needs to block that information from being included in that consumer’s report.

Fair Credit Reporting: 6.3.3.9.6 “Date Opened” field

The “Date Opened” field of the base segment is a common source of misunderstanding. All creditors are expected to include in the base segment a Date Opened field, which is usually the date an account was opened. However, a debt collector is instructed to put into this field the date the debt was placed for collection, assigned, or purchased. When this date is included in consumer reports, it is frequently misunderstood.180

Fair Credit Reporting: 6.3.3.10 Metro 2 and Student Loans

Most student loans are subject to extensive federal regulation, and borrowers have a variety of remedies available to them when they have been defrauded by a trade school or have experienced difficulty in making timely payments. These regulations are treated thoroughly elsewhere.181 However, because of the unique treatment often required for student loans, some standardized ways of furnishing information to CRAs have been established.182

Fair Credit Reporting: 6.3.3.11 Metro 2 and Utility Bills

Utility company bills are unusual in that the amount due is generally not scheduled. Metro 2 guidelines unique to utilities183 call for standard codes for duration of payment terms (001) and scheduled monthly payment amounts (0) unless actual terms and schedule exist. Otherwise, payment history, identifying information, and other information are treated the same as for other creditors. Multiple accounts are treated separately. The purchase of merchandise such as an appliance is treated as installment credit.

Fair Credit Reporting: 6.3.3.12 Metro 2 and Dishonored Checks

Some CRAs specialize in dishonored checks or track check payment histories because they function as check guaranty companies.184 A dishonored check, also called NSF (for Non-Sufficient Funds), usually creates a debt and is treated as a “returned check” debt in Metro 2.

Fair Credit Reporting: 6.3.3.13.1 Bankruptcy reporting

Any report mentioning a bankruptcy can have a detrimental effect on the consumer. Thus, it is important that the report accurately indicate what kind of bankruptcy is involved and the proper status of any bankruptcy proceeding.186 The Metro 2 format requires that a furnisher specify in some detail the nature of any reference to bankruptcy.187

Fair Credit Reporting: 6.3.3.13.2 Bankruptcy associated with nonfiling joint obligor

It is especially important to track separately the obligations and status of primary and associated consumers when one or the other has filed for bankruptcy. The bankruptcy of one should not be imputed to the other, because it is irrelevant to the creditworthiness of the other consumer.

According to the Metro 2 Manual, the status of such an account should be reflected as follows:

Fair Credit Reporting: 6.4.1 Overview

The notion of accuracy pervades the FCRA and generally includes information that is true and correct as well as complete and not misleading.197 As discussed below, several provisions addressing accuracy apply specifically to furnishers. However, courts naturally use the general and accepted understanding of accuracy and completeness developed under the entirety of the FCRA to inform the furnisher provisions which employ the same standard.198

Fair Credit Reporting: 6.4.2.1 Duty Stated in the Negative

Unlike the requirement placed on CRAs, the FCRA does not specify an affirmative standard of accuracy for those who furnish information to CRAs. CRAs must maintain reasonable procedures to ensure the “maximum possible accuracy” of the information they report.205 In contrast, the duty of furnishers to provide accurate information is stated in the negative, as two prohibitions against reporting inaccurate information.