In past blogs in this Back to Basics Series, I have addressed the various obligations of creditors that use credit reports and report payment histories of their customers to Credit Reporting Agencies (CRAs). The Fair Credit Reporting Act (FCRA) and the Federal Trade Commission (FTC) Credit Reporting Regulations have fairly specific compliance requirements. And over the years, as creditors and CRAs have been sued, much law has developed on the finer points of compliance. That is a troubling way to develop clarity in the law, but unfortunately that is how the law often develops.
I do want to note here that the FTC does issue staff opinion letters, press releases and consumer education materials to instruct us how to comply with credit reporting obligations under the FCRA.
But there is another way, also. In many facets of business, particularly lending, industry trade associations publish guidance to assist in interpreting legal requirements. The Credit Reporting Resource Guide that is published by the Consumer Data Industry Association is one of those publications. When a creditor signs-up with a CRA, the Guide is made available to the creditor. The Guide is a vast source of information for creditors and has become the “bible" for CRAs and creditors for interpreting their compliance obligations under the FCRA.
The Guide is not “law.” In fact, the Guide is very clear to disclaim that it offers professional or legal advice. However, it has become an accepted standard in most areas of credit reporting, by offering guidance for Automated Data Reporting, Coding (including account type codes by industry, account status codes and special comment codes), and setting forth common Field Definitions. The Guide also contains frequently asked and answered questions, as well as explanations and examples on a wide variety of topics and reporting scenarios.
Credit reporting is really complex. It is also the subject of too much litigation. It is important that creditors, both lenders and credit sellers, have a fully developed understanding of their obligations and of industry standards.
Practice Pointer: Since your reporting compliance is likely to be judged by the standards used in the industry, use the Consumer Data Industry Association Credit Reporting Resource Guide as a primary resource material.
Please note: This is the fifty-fourth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking here.