Mega Contributor
RobertEG
Posts: 17,456
Registered: ‎03-19-2007
Re: Collection reporting lates

A debt collector cannot report "lates" that occur under their collection account, as the consumer has no account with the debt collector, and a debt collector does not send billing statements with a due date upon which to calculate any "lates."  The collection account segment of a credit file does not provide for separate reporting codes for delinquencies that occured under the collection account.

 

So why do credit reports frequently show "lates" listed under a collection account?  Those dates are taken from the original creditor account segment of the credit file, and are based on lates reported by the OC. 

OC accounts store delinquencies in several places.  The current status usually, but not always, shows the current level of delinquency on the OC account.  Current status is a hybrid code which can show either current delinquency status or payment status.  It usually begins by showing current delinquency status, such as "60-late."  However, if certain account activities occur, such as referred for collection, charged-off, paid, etc., the current status is updated to show that information.  Being only a snapshot as of today, any update to current status erases any prior level of delinquency or account status.  To retain the current delinquency status, an additional code, called the Payment Rating, is used to store only the last, highest level of account delinquency.  Thus, taken together,the current status and payment rating codes reflect current account status as well as the delinquency level reached for that current status.  And of course, all monthly reporting of derogs is stored in the Payment History Profile, usually back for at least 24 months.  So all prior delinquencies, highest level of current delinquency, and current account status, are all scattered about the OC account segment of the credit file.  Where they are formatted when shown in a commercial credit report is up to the one providing the credit report.

 

Debt collector reporting provides for two current status reportings.  Assigned/sold to them, and thus reported as an Open collection, or Paid, was a collection, and thus reporting as a closed collection.  They also report the current balance under collection, and may enter a special comment if the paid status was the result of payment of less than the full amount of the debt.  But they dont report additional delinquencies.  Any showing of status of delinquencies associated with a collection is based on reporting done on the OC account, based on one or more of the codes discussed above.

 

Commercial credit reports jumble this information, often leading the consumer to conclude that the debt collector is incorrectly reporting delinquencies.  To add to the confusion, any furnisher can "update" earlier reporting by just providing an entire re-reporting of all prior history, thus leading to the perception that the furnisher is reporting new lates.  Such updating does not alter the date of occurence of the actual derog.

More thorough and better-formatted credit reports, such as the ones through annualcreditreport.com, will show the distinction.

 

In my opinion, a lot of time is wasted by consumer complaints over reporting of delinquencies by debt collectors.  If one digs deeper into the actual reporting codes and who provided them, it will show that there was, in fact, no such reporting by the debt collector.