Credit Bureau Reporting/ Metro 2 Compliance
Credit Bureau Reporting/ Metro 2 Compliance
Metro 2 is the standard format for which financial institutions must electronically send data about their loan customers electronically to the major credit reporting agencies (CRAs). One of the goals/benefits that should be derived from using a standard format should enable banks to comply with the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA). The Consumer Data Industry Association (CDIA) provides the definitions that go along with Metro 2 language. Recently, federal regulators have placed an increased emphasis on the completeness and accuracy of the data being transmitted to the major CRAs and data being published by the each of the CRAs. A review of the CFPB’s Consumer Complaint Database noted over 50,000 complaints from January 1, 2016 through February 28, 2017 related to credit bureau reporting. The accuracy of the data being reported to and by the major CRAs is critical to a consumer’s ability to receive credit in today’s marketplace. Below are some tips to ensure your credit bureau reporting process is complete and accurate.
- Understand how core system coding converts data into Metro 2 language.
- Ensure that the total number of records reported to the CRAs agrees to the total number of records that should be reported based on system data for loans that should be reported.
- Include key data fields for credit bureau reporting purposes in the review of new loans being setup on the core system.
- Confirm that account level maintenance is restricted to only those employees whose job duties warrant such authorization.
- For account level maintenance changes that have an impact on credit bureau reporting, such as the removal of one borrower from the note, notification that a customer has been placed on active duty, or the charging off of a loan balance, ensure changes properly flow through to the appropriate coding or removal of such information within the file distributed to the CRAs.
- If possible, review data sets within a spreadsheet for quick filtering for anomalies that would not be consistent with your Bank’s operations. For example, if your Bank does not offer credit cards, the file being sent to the CRAs should not include Account Type 18.
- The Date of First Delinquency (DOFD) for Metro 2 reporting purposes is not calculated in the same manner that days delinquent is noted in your core system. The DOFD does not start until 30 days after the first due date. For example if you are reporting data as of 1/31/2017 and a payment has not yet been received for a loan has a due date of 1/1/2017, the loan should be reported as being zero days past due. The reporting of delinquency does not start until 30 days after the first due date. A quick way to ensure reporting is accurate would be to compare loans that are 30 days or less past due per your system to your file being reported to the CRAs. Each of these accounts should be coded as an “11” within the Account Status
Finally, if you are receiving a high number of complaints related to credit bureau reporting, you should consider reviewing how that data is entered and setup on the core system in order to potentially identify an issue impacting a significant portion of your customers.
For additional information contact Mark Gallagher at mgallagher@fosaudit.com.
Credit Bureau Reporting/ Metro 2 Compliance