Federal Financial Institutions Examination Council	Press Release
For Immediate Release	January 18, 2000

Federal Banking Agencies Issue Advisory Letter On Reporting Practices to Credit Bureaus

Federal banking agencies today issued an advisory letter about the practice of some financial institutions not reporting customer credit lines or high credit balances to credit bureaus. In a joint letter to the heads of banks, thrifts and credit unions, the agencies also stated that some lenders have not reported any loan information on subprime borrowers, including payment records. The agencies indicated that they were advised that the lack of reporting is primarily the result of intense competition among lenders.

"Institutions that do not modify their credit risk management processes to compensate for omitted data in credit bureau reports could inadvertently expose themselves to increased credit risk," said the agencies. "Credit bureau information provides a useful and efficient means for financial institutions to collect data used to assess the financial condition, debt service capacity, and creditworthiness of retail borrowers."

The letter was issued by the Federal Financial Institutions Examination Council on behalf of the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of Thrift Supervision.

The agencies said they expect banking organizations to strive to resolve issues related to consumer credit reporting in a way that supports both the safety and soundness of institutions' credit risk management and consumer access to credit. The agencies said financial institutions, when appropriate, should take these actions:

• Assess the effect of incomplete credit bureau information on credit decision processes, including the impact on the predictive ability of credit scoring and other account acquisition and management models.
• Develop and implement strategies to mitigate the effect of incomplete credit information.