5 Deadliest Mistakes Made in Credit-Bureau Disputes
“Five years ago, it was acceptable for credit reporting to be last on your list of worries, but that’s no longer the case,” AutoStar’s Richard Hudson says.
What should auto dealers and lenders do after being notified a customer is disputing information they provided to a credit-reporting bureau?
Most importantly, respond appropriately, says Richard Hudson, director-customer success at AutoStar Solutions, a dealership-management software provider.
He cites five “deadliest” mistakes dealers and lenders can make:
Not properly training staff. Credit reporting now carries more regulatory consequences. Train at least twice a year. Requirements change rapidly, so update processes accordingly. Document training. “If something goes wrong down the road, you can make the case it’s an inadvertent error, and not because you weren’t trying.”
Not documenting a process meeting “reasonable-procedures” guideline. To avoid this, identify existing practices or policies that could compromise the accuracy or integrity of furnished data. Hudson’s example: If a vehicle is voluntarily repossessed, indicate that, so it doesn’t show as a charge-off on the consumer’s credit report. Review in-house technology and conduct self-audits related to accuracy and disputes. Maintain records long enough to substantiate the accuracy of anything reported.
Taking too long to respond. Complete an investigation within 30 days from when the consumer filed a dispute. Otherwise, you may be liable for actual and punitive damages.
Adopting procedures that don’t match your business. At least once a quarter, review the changes to your business and assess whether your procedures need to be updated as a result.
Being unaware of responsibilities as a furnisher. Those include not reporting information you know or think is inaccurate. Correct and update information, provide notice of dispute and report the date of first delinquency within 90 days of reporting any derogatory information.
Credit reporting is a complex issue with many moving parts, Hudson says. It requires more than can be provided by a 1- or 2-page policy manual. That said, a manual should do more than collect dust. Use it to show day-to-day implementation.
“Five years ago, it was acceptable for credit reporting to be last on your list of worries, but that’s no longer the case,” Hudson says.
The Consumer Financial Protection Bureau is bearing down on credit-reporting agencies and finance sources who in turn, “are holding dealers and lenders accountable,” he says.
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