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Are Creditors Required to Report your History?

On Behalf of | Aug 27, 2018 | Consumer Protection

In January of 2018, GM Financial, the automotive lending giant, ceased to report any of its account information to the credit reporting agencies for as many as 2.5 million of its customers.  Consumers were left with blank information which could essentially alter their credit score.  Is it legal for a creditor to stop reporting information?  Does the law require it to report?

GM Financial Case

In late 2017, GM Financial began to experience problems with its computer system, leading to inaccurate account reporting to the credit reporting agencies after its system underwent a technology upgrade.  After being unable to fix the system immediately it ceased to report consumer account information.  This action had a positive affect for some consumers who had late or unpaid accounts with the bank but adversely affected consumers with a positive credit history looking to apply for new loans as they had little to no automotive account information to refer back to.

No Obligation to Report

Under the FCRA, it is illegal for a lender, such as GM Financial, to report inaccurate information about its customers to the credit reporting agencies, but the law does not impose an obligation on lenders to report at all.  In fact, reporting is entirely voluntary and, not only can the lender chose which agencies it wants to do business with, but agencies can chose not to report with specific creditors as well.

Some Companies Choose Not to Report

Most lenders choose to report their consumer information.  Account information can be used as leverage to force consumers to pay, as derogatory payments will hurt their credit score. However, some companies still choose not to report.  Most nationwide lenders report to the three big credit reporting agencies, Equifax, Experian and Trans Union.  These companies include banks, credit card companies, mortgage lenders, student loan servicers, finance companies, public recorders and collection agencies. However, there are companies and industries that don’t typically report, including insurance companies, landlords and utility companies.

So, while you can request that your lender report to the credit bureau in an effort to build your credit, there is no legal obligation under the FCRA to report the information.

If you believe your rights have been violated under the FCRA and you would like the advice or assistance of counsel, contact SmithMarco, P.C. for a completely free case review.