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Financial Institution Letters

Consumer Credit Reporting Practices

January 21, 2000

SUBJECT: Identifying and Compensating for Missing Data in Credit Bureau Reports

The Federal Financial Institutions Examination Council (FFIEC) has issued the attached advisory concerning the practice of some lenders of not reporting selected customer credit information to consumer reporting agencies (credit bureaus). Specifically, certain large credit card issuers are no longer reporting customer credit lines or high credit balances, or both. In addition, some lenders, as a general practice, do not report any loan information on subprime borrowers, including payment records.

Both the retail credit industry and consumers have a vested interest in the accuracy and completeness of credit bureau information. Full and complete information about a borrower's credit history is a valuable and useful tool in the underwriting process that enhances the ability of lenders to make quick, cost-effective credit decisions while simultaneously reducing credit risk. Because the completeness of credit bureau information is no longer assured, financial institutions that rely on this information in their underwriting and account management functions should have processes in place to effectively identify and compensate for missing data in credit bureau reports and models. The attached advisory describes actions that institutions should take, if appropriate, to address this issue.

For more information, please contact your Division of Supervision Regional Office or Examination Specialist Serena L. Owens at (202) 898-8996.

James L. Sexton

Attachment: Consumer Credit Reporting Practices

Distribution: FDIC-Supervised Banks (Commercial and Savings)

NOTE: Paper copies of FDIC financial institutions letters may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (800-276-6003 or (703) 562-2200).

Last Updated 01/21/2000

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