Collection Triggers

Posted By: Tesla

Collection Triggers - 05/08/15 04:46 PM

Is anyone using a product from their credit reporting vendor that notifies you when a consumer defaults or has other negative activity in their credit history?

Do you have to give a credit score denial notice, even though you technically don't use the score but it is part of the report?

What have your examiners asked about this program? Can you give any advice?
Posted By: NSF, CRCM

Re: Collection Triggers - 05/08/15 05:41 PM

We do not use this product.

Originally Posted By Tesla
Do you have to give a credit score denial notice, even though you technically don't use the score but it is part of the report?


FCRA requires the notice to be provided if you take any adverse action. If you are just getting the report and not taking any action then a notice is not required.
Posted By: Tesla

Re: Collection Triggers - 05/08/15 07:01 PM

Realized I need to add more detail... these are open end credits and we want to freeze or close their line of credit. The bureau looks at our specific portfolio (by subscriber code) and provides us score
Posted By: NSF, CRCM

Re: Collection Triggers - 05/08/15 07:23 PM

Freezing or closing the line of credit would meet the definition of an adverse action.

I believe this would warrant an ECOA notice and FCRA notice to be sent to the customer.

Hopefully one of the Gurus will chime in to confirm or correct me.
Posted By: Tesla

Re: Collection Triggers - 05/08/15 07:58 PM

Thanks NSFW - didn't see your post before I put my reply up. Anyone using this product?
Posted By: Tesla

Re: Collection Triggers - 05/08/15 08:01 PM

Yep, I agree ECOA/FCRA AAN with credit score information. Now, I just wonder what regulators think of the program. I'm thinking we could have a customer paying us perfectly but defaulting on his mortgage or other debt with someone else and we would be closing his LOC. Thoughts?
Posted By: Dan Persfull

Re: Collection Triggers - 05/08/15 09:27 PM

You can't just suspend someone's HELOC because they are past due on other debts. You have to have sufficient documentation to support you have a reasonable belief that you won't be repaid, your equity position has significantly declined etc.

You may want to look up and review the FDIC's Financial Institution Letter FIL-58-2008, June 26, 2008.
Posted By: Tesla

Re: Collection Triggers - 05/08/15 10:12 PM

These are credit cards - sorry for forgetting that detail.
Posted By: Tesla

Re: Collection Triggers - 05/11/15 03:09 PM

So I think this is OK for credit cards. I read the rule and the only specific exemptions I see are, as Dan pointed out, under the dwelling secured section.

Am I missing anything? Is anyone else using this service from their CRA vendor?