Do you sell to small businesses, sole proprietors, or direct to consumers? If you do, you need to be aware of the Fair Credit Reporting Act, (FCRA) and actions your company must take to remain in compliance.
Do not report bankruptcy information of more than seven years old.
The (FCRA) is intended to ensure that the sharing of personal credit information is authorized by that individual and is reported accurately.
Business credit information is exempt from FCRA requirements. However, if you are selling to consumers or companies where the creditworthiness of the company is tied to the owner, there are essential FCRA compliance requirements that must be followed:
- Create a credit policy that documents supporting procedures to ensure compliance.
- Train your employees in these procedures.
- Ensure that your credit application is compliant with FCRA:
- The credit application must include either a separate form or an addendum.
- It must have a dedicated space for the customer to sign and authorize access.
- A generic signature section on the application is not sufficient. It needs a separate section highlighted on the back of the credit application.
- You can not sign on behalf of your customers to grant access, even if they request you to do so. You need their signature.
- Keep all personal information gathered in a secure location.
- Allow only those who need to know access to the information.
- Ensure that the customer master records are up to date and correct.
- Recheck and verify if the data is accurate before sharing it with credit bureaus.
- Check if the reported debt was forgiven due to bankruptcy.
- Do not report old debts as new.
- Do not publish an account as active when it was closed by the consumer.
- Do not report bankruptcy information that is more than seven years old or civil judgments over ten years old.
- Ensure that you don't make any mistakes while sharing the information. For example, verify the customer's exact name. It might be possible that the low-risk customer's name is similar to that of the high-risk one.
These are some essential points to remember. What are some other best practices that you follow?
