Furnisher

The credit reporting system comprises institutions, procedures, individuals, rules and techniques that can facilitate the flow of information relevant to credit agreement decision-making. Developing an effective credit reporting system is a lengthy process that requires sustained commitment from all stakeholders.

The entire process of setting up such a system, from the stage of discussion to public education and work on the legal and regulatory framework to actuarial system implementation, which includes uploading data and issuing the first credit report, may take three to five years to get ready.

Furnishers play an important role in the credit reporting system. These participants have defined roles and obligations as determined by the FCRA. These are creditors who use credit reports and the public records related to the bankruptcy filing, tax liens, and judgements also serve as a source of information for the NCRAs.

Each NCRA has a consumer database with over 1.3 bn active trade lines where the financial institution furnishes the bulk.

The furnishers have multiple incentives to contribute data to the NCRAs. Individual contributors recognize that the cross-company, cross-industry visibility into credit risk offered by credit bureaus depends on widespread creditor participation.

For each tradeline, creditors that furnish information to consumer reporting agencies are referred to as furnishers under the FCRA who provide the type of credit like the auto loan, credit card, mortgage, the credit limit or the loan amount, the account payment history (the timelines of payments, whether or not the account is delinquent or in the collection and the dates the account was opened and closed).

Suppose there is more than one consumer or borrower on a credit account. In that case, information related to the relationship between the consumer on the account and the authorized user is provided.

The US credit reporting system includes a cash flow of information where they get information from more than 10K furnishers. The furnishers provide monthly information on over 1.3bn consumer credit accounts or trade lines. 

They provide consumer credit information electronically to one or more NCRs using a standardized format.

Inaccuracies can happen when the consumer provides inaccurate data when they apply for a loan or if the creditor who furnishes data to the credit bureau inserts consumer information into the system inaccurately.

One can feed inaccurate consumer information into the system, or there can be typographical mistakes like transposing two digitals in the Social Security Number, first and middle names and misspelling names or others.

Annual credit report UK furnishes information to maintain an incentive for their borrowers to make timely repayments, and they are benefited from timely payment reports as it improves their creditworthiness.

Tradeline information contains indicators like-

If the account is individual or joint?

Is the account involved in any bankruptcy filing, or was the device that has been using this account stolen or lost or related to the credit card fraud or sent to the credit investigation department?

If the account was closed, what was the reason for closing it? And others.