When a borrower passes away while carrying a delinquent account, furnishers must handle the situation sensitively and accurately. Reporting the account of a deceased consumer carries legal, regulatory, and reputational considerations. The Fair Credit Reporting Act (FCRA) and Metro 2® guidelines provide specific instructions to prevent misreporting and to protect surviving family members and the deceased individual’s estate.
Can You Still Report the Account?
Yes, furnishers may report the account, but it must reflect the deceased status of the consumer. If the account was delinquent at the time of death, the delinquency may be included in the payment history—but the consumer’s status must be updated to reflect that they are deceased.
This ensures:
- The credit record is complete
- Future inquiries (e.g., by estate administrators) are informed
- Further debt collection attempts are not pursued inappropriately
Steps for Reporting a Deceased Consumer with a Delinquent Account
1. Update the Consumer Information Indicator
Set the Consumer Information Indicator to:
- “05 – Deceased”
This tag tells the credit reporting agencies that the primary borrower has passed away and prevents future credit activity in that person’s name.
2. Continue Reporting Delinquency Accurately
- Keep all delinquency history and DOFD (Date of First Delinquency) intact.
- Do not “reset” the account to current status or erase derogatory information.
- Ensure the Balance Amount and Scheduled Monthly Payment remain correct.
3. Avoid Attempting to Collect
While reporting may continue, the account should not be referred for collection unless legally recoverable from the estate. Attempting to collect directly from family members who are not co-signers or joint account holders is a violation of FDCPA (Fair Debt Collection Practices Act) guidelines.
Co-Signers or Joint Account Holders
If the account is joint, or another party is contractually obligated, the account should continue to be reported under the surviving borrower’s information. In this case:
- The “Deceased” indicator applies only to the deceased individual’s record.
- The remaining borrower’s record is unaffected by the deceased flag.
FCRA Compliance Guidelines
To comply with the FCRA:
- Furnishers must report complete and accurate data, including the consumer’s status at time of death.
- Furnishers should promptly update credit bureaus upon notification of a borrower’s death.
- Do not reassign the account to another consumer unless contractually obligated (e.g., co-signer or estate administrator).
Impact on the Credit Report
- Prevents Identity Theft
Properly reporting a consumer as deceased helps prevent fraudulent use of their identity. - Protects Families from Inappropriate Collection
Transparent and legal reporting avoids wrongful attempts to collect from unauthorized individuals. - Ensures Credit Records Reflect Final Status
Maintains historical accuracy for both credit bureaus and estate management.
Conclusion
When reporting an account where the borrower is deceased, it is critical to balance legal compliance with ethical responsibility. By updating the consumer’s record with a “Deceased” status, retaining accurate delinquency history, and avoiding collection missteps, furnishers remain compliant with the FCRA and help safeguard the integrity of the credit reporting system.