This Treasury Financial Manual (TFM) chapter provides guidelines for federal agencies to use when obtaining credit reports and reporting information on current and delinquent debts to credit bureaus.
Section 4010—Scope and Applicability
The provisions of this TFM chapter:
Nothing in this TFM chapter intends to suggest that the United States or any federal agency is subject to the obligations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (FCRA), that FCRA is applicable to the reporting of federal agencies to credit bureaus, or that sovereign immunity has been waived with respect to any of FCRA’s provisions. Agency personnel should consult their counsel for guidance on whether and/or how to comply with FCRA.
The Department of Treasury, Bureau of the Fiscal Service (Fiscal Service) is authorized to promulgate regulations and establish guidelines to assist federal agencies in the performance of debt collection activities, including the use of credit reports and reporting of current and delinquent debts to credit bureaus. Pub. L. No. 104-134, §§ 31001(m)(1) and 31001(aa)(1), 110 Stat. 1321-358 (1996) (codified at 31 U.S.C. §§ 3711(g)(10) and 3711 note, respectively); 31 CFR § 901.4.
There are several authorities relevant to federal agency’s use of credit reports and reporting of information on current and delinquent debts to credit bureaus:
Section 4020—Terms and Definitions
The following terms are defined for the purposes of this TFM chapter:
Commercial Debt—A debt arising from a business activity of the debtor. See Section 4030.
Consumer Debt—A debt arising from a personal activity of the debtor. See Section 4030.
Consumer reporting agency—A type of credit bureau, which has the same definition as set forth in 31 U.S.C. § 3701(a)(3).
Credit reporting agency or credit bureau—Any consumer or commercial credit reporting agency that has a signed agreement with a federal agency to receive and integrate credit information from voluntary subscribers, like other federal agencies and private sector entities, into their respective databases. In general, federal agencies should use nationwide credit reporting agencies.
e-OSCAR®—A web-based, Metro 2® compliant, automated system that enables data furnishers (including federal agencies) and credit reporting agencies to create and respond to consumer credit reporting disputes.
The above terms are defined for the purposes of this chapter. For additional terms related to this chapter, please see the TFM Glossary.
Reporting current commercial and delinquent consumer and commercial debts to credit reporting agencies is not only required by law, but also promotes effective federal financial management. Reporting debts can help other agencies have a more complete picture of a person’s creditworthiness. In addition, reporting current debt information helps persons who timely pay their bills to the United States reap the benefits of their positive credit history.
With some exceptions, federal agencies must refrain from granting loans, or providing loan insurance or loan guarantees, to any debtors owing delinquent debts to the United States, regardless of whether the unresolved obligation is a consumer or commercial debt. See 31 U.S.C. § 3720B; 31 CFR § 285.13. Reporting delinquent debts assists other agencies with complying with this bar on providing federal financial assistance to delinquent debtors.
4030.10— Consumer vs. Commercial Debts and Individuals vs. Entities
There are certain distinctions regarding the reporting of debts depending on the nature of the debt (consumer vs. commercial) and the nature of the entity (individual vs. entity).
The distinction between consumer debt and commercial debt refers to the type of debt, not to the type of debtor. Individuals (sometimes referred to as “consumers”) can owe either consumer or commercial debts; any debt (i.e., consumer or commercial) can inform an individual’s creditworthiness. It is the purpose of the activity--not the type of entity involved--that determines whether an agency should classify a debt as consumer or commercial. The term “commercial debt” signifies a debt that arose from a business activity, while the term “consumer debt” signifies a debt that arose from a personal activity.
Relevant law requires reporting of debts owed by individuals--regardless of whether consumer or commercial--to consumer reporting agencies (see 31 U.S.C. 3711(e)). Relevant law also requires the reporting of commercial debts to credit bureaus (see OMB Circular A-129). For consumer debts owed by individuals, agencies should comply with Section 4035. For commercial debts owed by non-individuals, agencies should comply with Section 4040. For commercial debts owed by individuals, agencies should comply with both Sections 4035 and 4040. If the agency believes it may be owed consumer debts by non-individuals, it should consult its counsel regarding its reporting requirements.
Agencies should sign written agreements with credit reporting agencies before reporting any current or delinquent debt information to such credit reporting agencies.
4030.30—Dollar Threshold for Debt Reporting
There is no minimum dollar threshold on the amount of a debt subject to reporting.
4030.40—Credit Bureau Reporting by Multiple Agencies for the Same Debt
Federal agencies generally must transfer debts that are more than 180 days delinquent to Treasury or a Treasury-designated debt collection center for collection (see 31 U.S.C. § 3711(g)). When a debt is or has been serviced by more than one agency, the agencies must take steps to ensure that they do not cause inappropriate, duplicative reports to credit bureaus for the same debt.
Section 4035—Reporting Consumer and Commercial Debts Owed by Individuals to Consumer Reporting Agencies
4035.10—Reporting Current Debts
Pursuant to OMB A-129, federal agencies generally may report current consumer debts to credit bureaus and are encouraged to do so.
4035.20—Reporting Delinquent Debts
Pursuant to 31 U.S.C. § 3711(e), federal agencies must report information on all delinquent debts owed by individuals to a consumer reporting agency. Before reporting a delinquent debt to a consumer reporting agency, the federal agency must:
4035.30—Frequency of Debt Reporting and Updates
Agencies should report debts to consumer reporting agency monthly. Agencies may update debt information more frequently to maintain the integrity and accuracy of the information reported. If an agency makes an update, it should ensure its internal records are also updated to avoid the re-reporting of incorrect information.
4035.40—Method and Format for Reporting Debts to Consumer Reporting Agencies
Agencies should report debtor’s account information to credit bureaus on a non-exclusive basis.
Agencies should report debt information to credit bureaus electronically using the Metro 2® Format through e-OSCAR® or another mutually agreed-upon method. The credit reporting industry uses the Metro 2® Format for reporting all consumer debt information. Electronic copies of the Metro 2® Format are available from Consumer Data Industry Association (CDIA). Because the Metro 2® Format is subject to periodic update, agencies should ensure that they have appropriate procedures for obtaining updates to the reporting standards, as well as procedures for incorporating those updates into their process for credit bureau reporting.
To maintain the accuracy of federal debtor data, agencies should develop and follow procedures when reporting information in the Metro 2® Format. Such procedures should be consistent with the following guidance:
Before disclosing information to a credit bureau, agencies must provide the debtor with an opportunity for review of the agency’s initial decision on the claim. In some circumstances, agencies may also be required to provide the debtor with post-reporting opportunities to review the agency’s initial decision.
Under 31 U.S.C. § 3711(e), debtors may dispute inaccurate information in their consumer credit reports and have a right to review records pertaining to their debts. Although 31 U.S.C. § 3711(e) does not require that federal agencies process a dispute within a specific timeframe, it does require that federal agencies promptly verify or correct information about a debt upon the request of a consumer reporting agency for verification.
Credit reporting agencies also have obligations to investigate disputes under FCRA that arise independently of 31 U.S.C. § 3711(e); credit reporting agencies may delete information if their investigation is not complete within 30 days from the date the credit reporting agency receives a dispute from an individual (or debtor) in writing.
Agencies should seek to perform their investigations in a manner that will allow them to verify or correct the disputed information within 30 days to prevent credit bureaus from deleting the disputed information. Typically, credit reporting agencies provide notice of the dispute to the agency within five days by uploading the dispute information into e-OSCAR® for the federal agency’s review or will notify the entity of the dispute through other mutually agreed-upon methods.
4035.60—Procedures for Changing Debts from “Current” to “Delinquent”
This subsection describes the procedures for agencies to use when the status of a debt changes from “current” to “delinquent.”
During subsequent reporting periods, the agency should update the debtor’s account status, as applicable.
4035.70—Termination of Collection Action; Limitations Period
Once an agency terminates collection action regarding a debt, it should update all relevant credit bureaus on the change in the debt’s status.
Even if an agency has not terminated collection action on a delinquent debt, an agency should consider whether it should discontinue future reports if more than seven years has elapsed from the date of first delinquency.
Section 4040—Reporting Commercial Debts Owed by Individuals or Agencies
4040.10—Requirements for Reporting Current and Delinquent Commercial Debts
Agencies must report account information on all current and delinquent commercial debts to credit bureaus. See 31 CFR § 901.4; OMB Circular No. A-129. If an agency is reporting information on a delinquent debt, it must first comply with the prerequisites set forth in 4035.20.
4040.20—Frequency of Commercial Debt Reporting and Updates
Agencies should report commercial account information on a quarterly basis. Agencies may update debt information more frequently to maintain the integrity and accuracy of the information reported. If an agency makes an update, it should ensure its internal records are also updated to avoid the re-reporting of incorrect information.
4040.30—Method and Format for Reporting Commercial Debts
Agencies should report commercial debt information to credit bureaus on a non-exclusive basis.
The CDIA developed the Metro 2® Format described in subsection 4035.40 only for reporting consumer debt information to credit bureaus. Although agencies may use, or attempt to use, the Metro 2® Format to report commercial debts, credit reporting agencies may require the use of another format. For example, Fiscal Service reports commercial debt information to credit bureaus using the Commercial Small Business Financial Exchange format. An agency should furnish the account information electronically, through eOSCAR® or another mutually agreed-upon method.
In addition, agencies should develop and follow procedures regarding the reporting of debt information to commercial credit bureaus. Such procedures should be consistent with the following guidance:
4040.40—Handling Disputed Information in Commercial Debtor Files
Federal agencies should have procedures to address disputed information. Agencies should investigate and resolve disputes regarding the accuracy of information in credit reports in a timely manner.
4040.50—Termination of Collection Action
Once an agency terminates collection action with regard to a debt, it should update all relevant credit bureaus on the change in the debt’s status.
Section 4045—Obtaining Credit Reports
OMB Circular No. A-129 requires that agencies purchase credit reports when screening loan applicants. Where appropriate, federal agencies should obtain credit reports on loan applicants from both commercial and consumer credit reporting agencies before extending credit or granting other forms of federal financial assistance.
In addition, 31 U.S.C. § 3711(h) expressly authorizes federal agencies to obtain credit reports or comparable credit information to collect, compromise or terminate collection action on any debt owed to the United States. Therefore, agencies should also purchase credit reports to do the following:
A credit bureau may also request that the agency sign a written agreement to obtain a credit report. Such an agreement may require the agency to certify that it has a permissible purpose under FCRA for seeking the report. Absent another permissible purpose, federal agencies owed a debt can generally rely on 31 U.S.C. § 3711(h), which allows agencies to obtain credit reports or comparable information to collect, compromise, or terminate collection action on any debt owed to the United States.
The cost of purchasing a credit report should generally be considered an administrative cost under 31 U.S.C. § 3717(e)(1) when the agency uses the report for collection activities after the debt becomes delinquent.
Direct inquiries concerning this TFM chapter to:
Department of the Treasury
Bureau of the Fiscal Service
Debt Management Services
3201 Pennsy Drive, Building E
Landover, MD 20785