Most consumers who file for bankruptcy protection will check their credit report after the filing to monitor their score.
Many will try and make sure that the creditors they discharged in their bankruptcy have acknowledged the bankruptcy case. Those consumers, however, are likely unaware that there are guidelines that have been adopted in the credit reporting industry that cover exactly what must happen to an account trade line after the filing and discharge of a bankruptcy.
The Consumer Data Industry Association (CDIA) is an international organization covering all types of borrowers and other reporting entities. The reporting industry, in an effort to harmonize how creditors report on and update a credit report, utilize a reporting format known as Metro 2.
The Metro 2 format provides various codes to the reporting entities so there is uniformity in how information is reported on a consumer’s credit report. Part of that reporting involves various codes or indicators, known as the Consumer Information Indicator (CII). The CII is a critical aspect of the Metro 2 format as the indicators tell a story about a consumer’s trade line and influence a consumer’s overall credit score.
Those indicators are critical when it comes to a bankruptcy filing and rebuilding credit. A creditor that fails to report the correct CII after a consumer bankruptcy filing runs afoul of the Fair Credit Reporting Act because the information being reported can be inaccurate or misleading. A failure to note that an account is subject to or was included in a bankruptcy filing can damage a consumer’s credit report and result in a lower score than would otherwise be generated had the correct CII been used to report the trade line.
The Federal Trade Commission estimates that 1 out of every 5 Americans have errors on their credit report. That percentage may be higher for those who have gone through or are in an active bankruptcy filing. It is critical that a consumer consults with an experienced consumer protection lawyer in order to review a potentially problematic credit report and be guided through the complicated dispute process in order to fix those errors.