Credit Reporting – The Basics
Audience: Loan Servicer or Collector, Upper Management, Developers, Accounting, Loan Servicing/Collections Managers, Administrator, Compliance, Data
Many lenders report their borrowers' debt and repayment history to credit bureaus, who collect information from countless lenders and compile it into credit reports. For the lender, this might serve as a bit of a deterrent, keeping would-be delinquent borrowers from skipping payments. At the same time, its a means of helping other lenders (and thus the industry as a whole) by identifying risky borrowers.
LoanPro's Loan Management System (LMS) makes it easy to report credit, although it does require a bit of setup. This article will explain the process at a glance, and then Report Credit will walk through the specifics.
How does the Credit Reporting Tool Work?
In LoanPro, there are two main ways to report a borrower's credit to a Credit Reporting Bureau. Our Mid-Market clients typically report through Credit Manager V, and our Enterprise clients will query the database directly to generate credit reports.
With either, you'll need a credit reporting account with at least one of the major credit bureaus. This is different than a credit pulling account. If you already have an account with one of the credit bureaus, it is most likely a credit pulling account.
Enterprise Solution: Database Query
If you have access to the database and a technical team who can handle a complex database query, we'd recommend pulling the information yourself and reporting it directly. If you jump ahead to the Credit Reporting Options section of our Report Credit article, where we'll go over the specific tables and columns you'll need to query.
Mid-Market Solution: Export to Credit Manager V
If you don't have the technical resources to query the database yourself, you can still get the data through the Credit Report tool in the LMS UI. This tool ultimately just a data export, similar to the Excel Data Dump tool. But it gets a little more complex when it comes to what you do with that data.
You'll need to purchase Credit Manager, a credit reporting software. Credit Manager can only be installed on Windows computers. Once you have set up an account with a major credit bureau and have installed Credit Manager, you are ready to report credit.
The whole process is explained in our Report Credit article, but let's go over the basics. In LMS, you'll open up the Loan Manager. If you want to report only some of your loans, use the search filters to narrow it down to a specific set. If you want to report on all of your loans, you don't need to filter anything.
From the Data Options drop-down, click 'Generate Credit Report', which will take you to the Credit Reporting page. From here, click the blue 'Export' button in the top right. A new report file will be generated below, which you can then download.
The file you download will be an encrypted .zip file. To unzip it, you'll need the password from the password column, right next to the download button. Afterwards, you can import it into Credit Manager V, who will send it to the credit bureaus you have a reporting account with.
Where does Credit Reporting Fit?
Credit reporting might deter fraudulent or careless borrowers who might otherwise not repay their loans. But as you build out your credit reporting process, bear in mind that reporting can't do anything to recoup losses if a loan does default.
This Feature is Not
Let's take a second to clear up some possible misconceptions about LMS's Credit Reporting Tool.
- LMS doesn't handle a lot of the process. Our system will pull your data and generate a .csv file (within a .zip file), but it won't validate your data or put it into the Metro 2 format. That's all done by Credit Manager V.
- Credit reporting isn't automatic. You'll need to generate the file and import it into Credit Manager V.
- LoanPro can't guarantee you get approved with any of the credit bureaus. Those organizations have their own policies as to who they approve or deny.
- This isn't the same as the credit pulling tool. You can Pull Credit from within a customer's Contact & Personal Info page in LMS. Rather than a direct relationship with the credit bureaus, this requires an account with Credco.
With an understanding of the basics, you're ready to dive in. Check out our Report Credit article for a more detailed walkthrough.