Information about business debt on personal credit report - The Bills.com Blog
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Information about business debt on personal credit report
Question: I had a business that failed around 2001. It was a construction co. I had a bond on a project and the surety co ended up with attorneys fees. I personally guaranteed the bond. The surety turned the attorneys fees over for collection. The collection company has decided to enter a tradeline on my personal credit report. They are also reaging the accountand reporting the history innacurately. From what I read these are FCRA violations. The CA disagrees stating FTC statement "Commercial credit or insurance. A report on a consumer for credit or insurance in connection with a business operated by the consumer is not a consumer report", and the act does not apply to it". Is it even legal for them to list this item on my personal report?
Answer: Thanks for your question, Mike. Generally speaking, it is my belief the business accounts such as the one you mention in your question should not be reported on your personal credit reports. While you did personally guarantee the bond, this was essentially a business transaction, and you acted only as a guarantor in case the business defaulted. The bond was not taken out in your name, nor did the bond issuer consider your personal credit history when underwriting the bond. Therefore, the account should not be considered as part of your personal credit history. While there are varying interpretations of how business debts should be treated in regard to personal credit reports, in my past experience, most business accounts do not appear on personal credit reports, unless the account was actually a personal
account, such as those opened by sole proprietors. However, if the bonding company obtained a judgment against you personally, it would be appropriate for the judgment to appear on your credit report as a public record.
In regard to the FCRA, the collection agency is correct that the FTC has stated in its policy briefs that the FCRA does not apply to accounts opened primarily for business purposes. However, the FCRA?s non-application to the account in question does not mean that the account should appear on your personal credit report, nor that the collection agency has free reign to report whatever information it wants to report to the credit bureaus. You mention that the collection agency has been inaccurately reporting the delinquency date of the account; regardless of the fact that the FCRA does not apply to business accounts, the collection agency cannot arbitrarily change the dates on the account. You may have a cause of action against the collection agency for intentionally reporting inaccurate information about you to the credit bureaus, especially if its actions have harmed you in some way.
I encourage you to consult with an experienced consumer rights attorney regarding this debt to determine
the best course of action available to you to solve this problem. An attorney should be able to help you fully understand your rights under both Federal and State law, and what you can do to protect yourself. Your attorney may encourage you to file a lawsuit against the collection agency and the creditor. Or, he may enter into negotiations with the collection agency. For example, the collection agency may be willing to remove the account from your credit report if you begin making regular payments on the debt.
You may also wish to dispute this debt with the major consumer collection bureaus?Experian, Equifax, and TransUnion. The Federal Trade Commission offers a free guide to disputing accounts on your credit report, available at www.ftc.gov .
I also invite you to visit the Bills.com Credit Help page , where you can learn more about credit, credit reports, and credit scoring.
I wish you the best of luck in resolving this account, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by diana said on Thursday 7th February 2008 17:37
In 2005 I opened a business in Michigan as an INC.After 2 years I had to close it due to economical losses.My utilities bills were all full paid.In Jan 2008 I received a bill of $2200 from the gas company in which they state that the meter was broken for a long period of time and that now I am supposed to pay an estimate.The problem is thier estimate is huge ,so far away from reality.I disputed the bill ,asking them to adjust the bill and to recalculate the estimate on something close to the real usage from the previous years.Today I received a phone call from their collection department,to pay the $2200.I said that my bill is under dispute.The answer was that the dispute was closed ,the amount remaining the same.When did this happen or why they didn't notify me they said they didn't know.My question is:can they report me to the credit report agencies as an unpaid bill?(the account was on company name )I want to mention that I have a very good credit history. Thank you
2. Posted by Nithin on Friday 8th February 2008 16:33
Diana, as I am not sure about the structure of your previous incorporated business, I really cannot comment on you being responsible for the utility bill in question. In all probability, you may not personally be responsible for this debt. The best course of action is to check for the same on your personal credit report. If the said debt is not reported on your credit profile then you are not responsible to pay it back. If that is the case, then please visit www.ftc.gov, where you can find a wealth of information about your rights with regards to collection calls, and even report the creditor harassment.