To Report or Not to Report

Credit reports are seen as a powerful collection tool. An individual’s credit score is seen as a personal reflection of credit worthiness. As such, reporting debts on an individual’s credit report will affect their credit score and the perception of their credit worthiness. This article touches on when you can report a commercial obligation on an individual’s credit report.

In light of the heightened standards of consumer protection measures, it is important to report only accurate and appropriate information on an individual’s credit report or else you will be exposed to statutory and compensatory damages. The Fair Credit Reporting Act (FCRA) does not directly answer the question raised about reporting a commercial debt on an individual’s personal credit report. It is, at times, permissible to report a commercial obligation on an individual’s credit report under the framework set up by the FCRA. However, before any such credit reporting, a factual inquiry should be made as to the obligated party or parties’ organizational structure, the contract terms, and whether or not a personal guaranty has been signed and delivered.

By definition, commercial obligations are not excluded under § 605 of the FCRA which sets forth the type of information that may be reported. Since an individual’s credit report should only reflect his or her credit worthiness, if the individual is not liable, then the debt should not appear on the individual’s credit report. The determination of who is liable on the debt is critical to answering the question whether or not the debt should be reported on the individual’s credit report.

You can report a commercial debt on an individual’s credit report if that individual has a legal obligation under the contractual agreement and if he or she is personally and presently liable for the debt. In addition to being liable on the debt, the reporting of accurate information on the individual’s credit report should only be done if one of the permissible purposes under the FCRA exists, such as debt collection, written authorization or a legitimate business need.