Frequently Asked Questions

I. Credit Reporting Laws and Regulations

What is FCRA?

The Fair Credit Reporting Act (FCRA) is the federal law which regulates the credit reporting industry. FCRA is designed to protect the privacy of credit report information and to guarantee that information supplied by consumer reporting agencies (CRAs) is as accurate as possible. It states that consumers have the right to know the contents of their own credit records, have the right to challenge the accuracy of information and have it reverified, updated or removed. It also limits the time negative information can be kept on a credit record and assures that only persons with a permissible purpose will have access to a consumer's credit history.

The Fair Credit Reporting Act (FCRA) also outlines the responsibilities & procedures for organizations that provide consumer data information to a consumer reporting agency (CRA) including credit bureaus. It is important for you to familiarize yourself with the entire Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the “FCRA”), and especially § 623 governing the responsibilities of furnishers of information and § 611 governing procedures in case of disputed accuracy.

The FCRA can be downloaded from the Federal Trade Commission's (FTC) web site at www.ftc.gov/os/statutes/fcradoc.pdf

What is a Data Provider?

If you report information about consumers to a CRA, you are considered a data provider or "furnisher" of information under the FCRA. The responsibilities of information providers are found in Section 623 of the FCRA and § 611 governing procedures in case of disputed accuracy.
What do Providers Need to Know about FCRA?

What do Providers Need to Know about FCRA?

The FTC put together a document to highlight Information Providers Need to Know:
www.ftc.gov/bcp/conline/pubs/buspubs/infopro.htm

In order to meet their obligations under the FCRA, the four major credit bureaus came together and developed standardized technologies to streamline the flow of data between the CRAs and their Data Providers:
1. Metro2 – an electronic format to receive data from data providers
2. e-Oscar - online solution for communicating with creditors to re-verify consumer disputes within the 30 day prescribed period

Resources on new FCRA Rules - July 1, 2007

1. MoFo_FCRA_Furnisher_Rules.pdf

2. FTC site

II. Technology

What is Metro2?

The major credit bureaus came together and developed a standardized electronic format that defines required data points into specific fields for every borrower and loan. This electronic format is known as Metro2. All consumer credit data providers to the four major credit bureaus (Equifax, Experian, Innovis and TransUnion) are now required to submit their data electronically in Metro2 format.

CBA requires that each CBA Reporter furnish data to CBA electronically in a compliant Metro2 file.

Does CBA offer Metro2 software?

No. In its original business plan, CBA considered providing Metro2 software. However, our research identified a growing number of Metro2 technology solutions that could better meet the diverse needs of community lenders – solutions that both reduce staff time and data inaccuracy by integrating into your current portfolio management solutions. Specifically:

1. CBA partnered with CommonGoals, DownHome Solutions, GMS, Nortridge, PIDC Portfol, Trakker software companies. Each has developed a Metro2 utility so that users of their loan management software can easily generate a compliant metro2 file directly from their loan management database without separate data entry.

2. CBA is targeting other loan management software common to community lenders to develop Metro2 utilities.

3. CBA identified that The Service Bureau and CreditTime2000 both sell inexpensive software options for small lenders who do not have a traditional loan management software and/or for lenders who use a customized package.

Unlike Metro2 software providers, CBA plays a unique role to help community lenders:
1) identify the best Metro2 technology to meet their needs;
2) receive a data furnisher membership with major credit bureaus; and
3) provide the secure technology solution to receive files from hundreds of community lenders and transfer them in aggregate to the major credit bureaus.

What data is reported in Metro2?

Metro2 files are used to report consumer data – that is the credit obligations of individual people (not businesses per se). This builds your clients personal credit history.

Will business loans be reported in Metro2?

Metro2 files are used to report consumer data – that is the credit obligations of individual people (not businesses per se). This does not mean business loans are excluded. In fact, almost all can be included. If a business loan is made to an individual, if the business entity is a sole proprietorship, or if an individual serves as a guarantor or co-signer, the individual(s) involved can be reported via Metro 2. The loan will listed on the consumer credit report as a Business Loan.

In addition, several credit bureaus (Equifax, Experian and Dun & Bradstreet) maintain separate database for business credit obligations. CBA is working with Experian Small Business and our software partners to open the opportunity to upload data to the Experian business division in 2009. We hope to offer this additional service so that your client’s businesses can also build a credit history.

III. Consumer Disputes

What is e-Oscar?

e-OSCAR is a web-based, Metro 2 compliant, automated system that enables Data Furnishers and Credit Reporting Agencies (CRAs) to respond consumer credit history disputes in a streamlined and efficient manner. e-Oscar is a communication tool – a credit bureau will open a case in e-Oscar when it receives a consumer dispute to communicate the dispute to the creditor in question who is then responsible to reverify the information being disputed and log their re-verification response through e-Oscar.

What are consumer disputes?

The Fair Credit Reporting Act, the federal law that regulates credit reporting activities, gives all consumers the legal right to dispute possible inaccuracies on their credit report and outlines the steps to be taken in the reinvestigation of any possible inaccuracies. The credit bureau is required to reverify items in question with the creditor at no cost to the consumer. The law requires that reinvestigations be responded to within 30 days. After the reinvestigation is complete, the credit reporting agency notifies the consumer of the outcome. If information in the report has been changed or deleted, the consumer is also sent a free copy of their revised report.

Specifically § 611 of the Fair Credit Reporting Act governs procedures in case of disputed accuracy.

Can a consumer bring an inquiry to the lender instead of the credit bureau?

Yes. In fact CBA encourages you to foster a relationship with your borrowers where they come to you first to question any credit information related to their loan on their credit report. This will give you an opportunity to correct mistaken data and/or clarify with your borrower why the information is correct. If you need to correct information on a specific borrower between monthly reports, you can send a Midmonth Correction Metro2 file with just information on that borrower.

However, if a borrower is not satisfied with your response to their inquiry, they still have the right to dispute the information with the credit bureau.

Will CBA help us respond to consumer disputes?

Yes. CBA has been approved to act as an agent on behalf of community lenders. As such, CBA will be able to manage a centralized master e-Oscar account with each community lender as a sub-account. By managing e-Oscar centrally, we can save community lenders both time and money.

How will CBA help community lenders respond to consumer disputes through e-Oscar?

CBA will assist community lenders by monitoring the e-Oscar account daily so that it can trigger a message to lenders immediately if and when a dispute appears. CBA staff will be trained in e-Oscar and consumer dispute processing and assist community lender staff reverify correctly and provide the information in the correct format. CBA will ensure that lenders have the maximum amount of time within the 30 day period to reverify and then help them reverify -- this will save community lenders significant staff time and training while still being able to respond efficiently.

Will CBA maintain data on our borrowers?

No. Community lenders are the data providers. They will be the only entity that maintains data on their clients, and the only entity that can reverify data at time of a dispute. While CBA will receive monthly Metro2 files – it will do so only to transfer consumer data to the credit bureaus. CBA will delete all Metro2 files within 30 days of receipt and will not maintain any personal data on borrowers each month.

Is CBA centralization of e-Oscar a value-added to the credit bureaus?

Yes. By monitoring e-Oscar on behalf of all lenders, CBA is also able to provide a level of accountability to the credit reporting agencies that consumer disputes will be handled efficiently and correctly by all community lenders. It will also allow CBA to monitor if specific community lender are either having trouble with coding and/or are reporting poorly resulting in an abnormally high number of disputes. In such cases, CBA can help improve the practices of data reporters and/or remove poor reporters from the database without impacting the ability of the majority of small lenders to continue reporting. The credit bureaus do not have the human resources to monitor and penalize individual community lenders and are more apt to return to a trend of blocking small lenders from their databases then dealing with poor reporters on an individual basis the way CBA can. This is truly an added value to the credit bureaus.

What if we don’t respond to a consumer dispute within the 30-day window?

As a lender it is your responsibility to respond to credit bureau requests to reverify consumer disputes within 30 days. If a credit bureau cannot reverify a dispute with the creditor within 30 days, the credit bureau must completely remove that tradeline from the borrowers file. This means the borrower file will no longer shows any record of that activity whether it was good or bad. The credit bureau will not replace this loan if you reverify it after the 30 days and/or include it again in your next monthly upload.

Since reporting and receiving reports between lenders and credit bureaus is completely voluntary, a credit bureau may choose to remove all activity from your agency if you fail to respond to multiple consumer disputes and they lose confidence that the data you have reported is accurate.

CBA’s centralized e-Oscar service can ensure you have proper notification and support to respond.

What if a borrower disputes the same information several times?

As a lender it is your responsibility to respond to credit bureau requests to reverify consumer disputes within 30 days every time they receive a consumer dispute inquiry – even if you just reverified the information the prior month. It appears that one strategy of less-reputable credit repair companies to help consumers clean up their files is to file disputes on every negative tradeline every month with the hope that creditors will not respond in a timely fashion and the bad tradelines will be dropped from the consumer file. Of course, CBA also encourages you to talk with your borrowers about not pursuing such credit building strategies – but to build their credit the old fashioned way and paying their debts on-time.

IV. CBA Membership

What is CBA membership?

CBA is a membership organization for all community financial service providers who want access to better products, tools and strategies with respect to credit building. CBA members have the opportunity to purchase specific products and services from CBA.

The CBA annual membership fee is currently $100 per year.

What is CBA Reporter?

Currently CBA is offering one product: CBA Reporter. This service helps community lenders access the technology and credit bureau memberships they need to report the loan repayment of their borrowers to Experian and TransUnion on a monthly basis through CBA. The CBA Reporter pricing is tiered based on our member’s loan portfolio size and, more importantly, estimated number of E-Oscar consumer disputes we process for the member annually.

We look forward to adding additional products and services in the new future.

How much does the CBA Reporter cost?

First year Reporter fees are $925, which includes the following:

A one-time $325 application fee, including the cost of credentialing with Experian and TransUnion and credit bureau site visits.
A $600 CBA Reporter fee, including unlimited technical assistance, monthly upload support, e-Oscar account, and membership fee.

After the first year, Reporter pricing is tiered based on your loan portfolio size and estimated number of E-Oscar consumer disputes CBA processes for your organization annually.

Tier	Description	Annual CBA Reporter Fee
1	Start-ups with less than 50 loans and less than 6 disputes per year) and first-year reporters	$600
2	Ongoing CBA Reporters with up to 250 loans and/or up to12 disputes per year	$800
3	Microlenders with up to 500 loans and/or up to 24 disputes per year	$1,000
4	Microlenders with over 500 loans and/or 36 disputes per year*	$1,200

* For loan funds with over 500 loans AND more than 36 disputes per year, CBA offers customized pricing.

Will clients see the name of our organization on their credit reports?

Yes. Unlike other data aggregators, CBA is proud to offer a model in which the community lenders name – and not that of CBA as the data aggregator – will be identified on the credit reports of your clients. Not only will this help your clients recognize you as the creditor – and hopefully lead to fewer disputes. It also legitimizes you as a lender to other lenders and underwriters who review your client’s reports.

Why does CBA ask for information on funders?

In our discussions with the credit bureaus, they are most concerned about receiving data from small lenders with respect to credibility and stability of organization. Specific concerns relate to 1) Uncle Harry will create a file to help his extended family get good credit; and 2) the creditor will disappear and not be available to reverify consumer disputes.

The fact that community lenders receive multiple years of underwriting (i.e. not just funding, but a level of due diligence) by trusted government and foundation entities was the best way to establish credibility for community lenders and differentiating community lenders from other small lenders providing predatory and subprime loans.

What happens if we start reporting and then decide to stop?

Credit bureaus generally will not keep credit records in their database when they no longer have a relationship with the furnisher to verify the data in the case of a consumer dispute. If you begin reporting, and then decide at some later date to no longer report, it is credit bureau policy to remove all active loan data from their database. It is up to the discretion of the credit bureau upon your request whether to maintain closed accounts in their database.

For example, if you are reporting on a 15-year mortgage and 5 years from now you decide to discontinue reporting, the entire mortgage will be erased from your client’s credit report. Think about a borrower who is delinquent as of the last reporting whose next payment to you is not reported.

On the other hand removing tradelines of borrowers with a good history of on-time payments - especially for borrowers have few other tradelines – can have a dramatic negative impact on a credit history and credit score.

When you begin reporting, know the commitment you are making to your clients.

V. Reporting and Clients

Are we legally required to inform clients that we will be reporting?

The FACT Act amendment to the FCRA related to consumer privacy and protection obligates data furnishers to inform their clients if they are reporting negative data (i.e. delinquencies) to a consumer reporting agency (aka credit bureau). CBA strongly encourages lenders to inform all of their borrowers -- and all associated loan gurantors -- before beginning to report data to a credit bureau.

Do we have to report on all current clients?

CBA encourages you to report on all active loans in your portfolio once you begin reporting on a monthly basis. We believe the benefits outweigh the costs for you and your borrowers.

The first time you report your loans, however, you will have the option to make a portfolio based decisions on what loans you want to report in the first file and going forward. We encourage you to make this decision carefully based on factors including the quality of data you have, the best interests to you as a lender, and the wishes/best interests of your clients (both historic and active).

Can we report on past clients?

CBA knows that you have clients in your database that you have not been able to report on these past five years. As a new Reporter, CBA can give you the option to report on active as well as closed loans, if you have complete and clean data on the loans. CBA negotiated with the credit bureaus that you make a portfolio based decision and then report on all clients that fit that definition categorically– we strongly discourage lenders to make reporting decisions on a loan-by-loan basis.

Sample acceptable definitions:
i) All active loans from their respective date of origination
ii) All loans originated as of a certain date – this may be a recent date (i.e. if you have just updated your loan documents) or a historical date from which you have good data.
iii) Specified loan products – you may decide to report a specific loan product and not other, i.e. if a specific product is serviced by another agency, if loan terms are less than 30 days

What if current or past borrowers do not want their loans reported?

If you have borrowers in your current portfolio who do not want their loans reported, please consider this issue as you make a decision on what loans you will report. CBA strongly encourages you not to make a decision on a loan-by-loan basis. Therefore, if you wish to comply with these borrower’s wishes, CBA encourages you report only on loans originated after the date in which these clients loans were originated.

What if prospective borrowers do not want their loans reported – is there an opt-out?

If your target market of borrowers includes individuals who actively do not want to be “on the grid”, we are aware of at least one community lender who uses the following best practice:

They offer borrowers the opportunity to “opt-out” of their loan being reported at the time of loan origination as part of the loan agreement package.

How do credit bureaus define delinquencies?

Credit bureaus and Metro2 define a loan as delinquent only once it is 30 days past due and then in 30 day increments (60 days overdue, 90 days overdue, 120 days overdue, 180 days overdue, etc.)

Will we still be able to work with clients to restructure their loans?

Yes. One of the benefits that many community lenders like to offer their clients is the opportunity to work with them to restructure loans when a client is unable to pay. Once you begin reporting, you can still do this - however you will want to work with your client within the first 30 days if you do not want them to be reported as delinquent. Reporting is one more incentive for your clients to notify that they are in financial troubles BEFORE they are late in their payments.