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Should You Credit Report Under Regulation F?

Mar 7, 2022

You’ve given all the usual “carrots” to overdue consumers as you try to encourage them to make payments on unpaid debt. Now, you might be considering whether to invoke the “stick” – reporting their overdue debt to the credit bureaus. But should you? Though it may seem that reporting should be an obvious consequence for consumers, there are valid reasons for and against reporting. Here are a few of the most compelling factors to consider as you look at individual overdue debt.  

Reasons to Skip Credit Reporting   

  • Not reporting overdue debt negates the need to comply with the Fair Credit Reporting Act (FCRA). The current requirements of the FCRA require organizations to obtain detailed specific consumer information as well as compliance with strict communication conditions and deadlines. Depending on the amount of the unpaid debt, this compliance may be too costly to complete.  
  • Reports to Credit Bureaus generate disputes. This fact is a given. Forgoing reporting to the Credit Bureaus will reduce the number of disputes. Again, for smaller amounts of debt, the time and money saved in back-and-forth correspondence and resolving disputes is an important calculation.  
  • As a follow-up to that point, fewer disputes result in less litigation. Once attorneys are involved, the overall cost of recovering debt can explode. There is always a good reason to leave the lawyers out of it, if possible.  
  • But if the lawyers do get involved, understand that Credit Reporting does result in actual damages to the Plaintiff, so payouts are always much higher.    
  • If the unpaid debt is due to medical bills, there is a further consideration in determining whether or not to report to the credit bureaus. Medical debt does not have the same simplicity (as in the consumer owes the amount or does not owe the amount) as other revolving lines of credit because so much of it can be disputed.   

Reasons to Consider Credit Reporting  

  • For some consumers, reporting the debt to the Credit Bureaus is the only way to get their attention. Putting the work in to make a report indicates to consumers that you are serious about recovering the debt.  
  • Additionally, if consumers doubt that you will report their delinquency, it will likely increase the number of late payments and defaults.  
  • If a dispute does end up in court, reporting the unpaid debt to the credit bureaus will indicate to the judge that, along with all the requirements allowed under FCRA, you have made every effort to recover the debt. 

Of course, these lists are not meant to be exhaustive. Whether or not to credit report may depend on a myriad of factors not covered here, and it’s important to take the time to discover what specific cases may affect your own organization.  

As one of the top experts in debt collection services, we’re dedicated to knowing and practicing all the strategies needed to be successful. If you’re interested in learning more about debt collection and how it can benefit your organization, contact us today to start a conversation and see how we can help you.