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Check if Your Customers Are Subject To FCRA

 

Check if Your Customers Are Subject To FCRA

 


 

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.

start quoteDo not report bankruptcy information of more than seven years old.end quote

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:

 

  1. Create a credit policy that documents supporting procedures to ensure compliance.
  2. Train your employees in these procedures.
  3. 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.

     

  4. Keep all personal information gathered in a secure location.
  5. Allow only those who need to know access to the information.
  6. Ensure that the customer master records are up to date and correct.
  7. 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    • Do not publish an account as active when it was closed by the consumer.

     

  8. Do not report bankruptcy information that is more than seven years old or civil judgments over ten years old.
  9. 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?


 

Editor · Highako Academy
 

Highako.com is a video first microlearning platform trusted by over 10,000+ Credit and Collections professionals. Drive skill growth with role-specific, expert video lessons. Measure practical expertise through hands-on assessments. Connect and collaborate with the largest credit community and get access to ready-to-use templates.