Do Creditors Have to Report to the Credit Agencies When They Merge Debts?

Buyouts, mergers, name changes--these have become common for financial institutions during the turbulent economic times of the last few years. Creditors merge for different reasons, and the manner in which they report their information impacts a consumer's debt accounting and credit reports.

Do Creditors Report Merged Debts to a Credit Agency?

The Fair Credit Reporting Act requires creditors to report accurate information.

The simple answer is yes. The Fair Credit Reporting Act requires a creditor to provide accurate, current information to a credit agency. This means that if a creditor purchases or merges with another company-- or even just purchases its accounts-- the customer's credit report should be updated to reflect any changes to the account.

Credit reports update every month. Unfortunately, this does not mean that a change in a consumer's account information automatically updates the following month. If a lender does not report the information quickly enough to the credit agency, a brief overlap may occur and result in duplicate accounts appearing on a consumer's credit report.

What Does This Mean for the Consumer?

Sometimes duplicate accounts may appear on your credit report.

Often merging debts has little impact on the borrower. Nevertheless, if the lender makes a mistake and does not update the information accurately or in a timely fashion, this may negatively affect a consumer's credit score.

If a creditor sells a delinquent account to a company for debt collection purposes, it should appear on a credit report with the new company's information. However, in cases involving delinquent debt, it is not uncommon for both companies to report the same debt, which also affects a consumer's credit score.

What Should a Consumer Do?

Consumers can stop inaccurate information by checking their credit.

Part of the legislation enacted with the Fair Credit Reporting Act is designed to provide consumers with a free copy of their credit report every year. The FCRA also requires creditors and credit reporting agencies to respond to consumer's disputes regarding their credit reports, usually within 30 days. Checking one's credit report is the best way to ensure that merged debts are reported and done so accurately.