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#323800 - 03/01/05 01:38 PM What to Report to Credit Bureau???
trout22 Offline
Gold Star
Joined: Nov 2004
Posts: 313
Would anyone care to share what you do?

Do you report loans with personal guarantors of commercial debt to the credit bureau? Seems to me that the guarantors are personally financially responsible (if need be) for that loan when they sign as a guarantor, and that could become outstanding debt on their part, which might affect their ability to repay obligations to other financial institutions. But, the loan will probably be paid in full by the business. Their credit score and LTV ratio would be negatively affected by reporting commercial relationships...

I understand that we are allowed to report whichever way we want? We've done it both ways in the past... From a compliance standpoint, I feel like that guarantor IS responsible for that loan for as long as there is an outstanding balance, and that loan could affect their ability to repay other obligations, so it should be included in the overall report.

Anyone else care to share their two cents?

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Lending Compliance
#323801 - 03/01/05 02:21 PM Re: What to Report to Credit Bureau???
waldensouth Offline
Power Poster
Joined: Nov 2001
Posts: 7,982
FINALLY ABOVE the gnat line
We do not report personal guarantors on debt. They are not immediately liable for the debt (as are co-signers) and should not suffer poor credit because they are not expected to pay until the loan goes south. If we ask them to pay and they refuse to honor their guaranty - then we report them.
"Once you learn to read, you will be forever free."

- Frederick Douglass

My Opinion Only.

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#323802 - 03/01/05 09:12 PM Re: What to Report to Credit Bureau???
Jan94 Offline
Platinum Poster
Joined: Mar 2001
Posts: 828
Does anyone use some sort of "application" or form signed by the guarantor that gives the bank permission to pull their credit report? We don't have such a form but do have the guarantor sign the guaranty agreement. However it does not reference authorization to pull credit. By virtue of them signing the guaranty I would think creates permissible purpose, but maybe I'm missing something that we should be doing? Would appreciate your thoughts.

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#323803 - 03/02/05 04:27 PM Re: What to Report to Credit Bureau???

Oops forgot to login, but this is my question (ARose) and thought I would bump it up to see if anyone has any thoughts they could share? This question came up from someone who worked at another bank prior to ours and said they used a form for guarantors to give permission. Thanks.

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#323804 - 03/02/05 11:18 PM Re: What to Report to Credit Bureau???

I was able to find an answer to my question. Did some more research and remembered that this went back to the old FTC issue about not being able to obtain a credit report on a guarantor for a business loan. The other agencies overruled and now it is permissible as long as the individual agreed to be personally liable for the debt. So as long as they agree to sign our guaranty form we should be fine without having them sign a form or application. Not sure why I let that question get by me. Too much to think about these days!

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#323805 - 03/03/05 03:07 PM Re: What to Report to Credit Bureau???
beaconpaul Offline
100 Club
Joined: May 2004
Posts: 218
We require personal guarantors for commercial debt to submit and sign a personal financial statement. That has a blurb about authorizing us to pull credit. Plus it's the "intent to lend/do business" rule that allows us to pull credit. We don't report guarantors to credit bureaus, even after they go south, I think we are too busy trying to work it out to remember that. However, I think there is a code to report a contingent liability on the CB if you really want to force the issue.

One more caveat, The personal fiancial statement should be addressed to your bank ( not have another banks name or logo on it) That makes it stronger if you take it into court and gives you that much more authority to pull the CB.
Luck is the collision of opportunity and preparation.

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