How should a furnisher report an account that is in deferment, where the consumer’s first payment is not yet due or where payments have been formally deferred to a future date?
Deferment is a distinct reporting concept in Metro 2 that applies when a consumer has no payment obligation for a defined period, with a known or projected date when payments will begin. Unlike temporary payment relief (where an existing payment schedule is paused), deferment typically applies from the start of a loan or during a formal postponement period such as an in-school period for student loans or a construction-to-permanent loan conversion. Metro 2 treats deferred accounts with specific field logic and requires the K4 Segment to communicate the deferred payment start date to consumer reporting agencies.
Definitions and context
A deferred account is one where:
- The consumer has a contractual obligation, but payments are not yet due.
- There is a defined or estimated date when payments will begin (the Deferred Payment Start Date).
- The account should still be reported to the consumer reporting agencies during the deferment period (it is not suppressed or held until payments begin).
Metro 2 uses two primary mechanisms to communicate deferment:
- Terms Frequency (Field 14) = “D” to indicate the account is currently deferred.
- K4 Segment (Specialized Payment Information) with Specialized Payment Indicator = 02 to communicate the deferred payment start date.
Step-by-step reporting standards
1) Initial reporting of a deferred account
When an account is first reported and payments are not yet due:
- Terms Frequency (Field 14): report “D” (Deferred).
- Scheduled Monthly Payment Amount (Field 15): zero fill (no payment is due during the deferment period).
- Account Status (Field 17A): report Account Status 11 (Current) since the consumer is meeting the terms of the account (no payment is required).
- K4 Segment: report with Specialized Payment Indicator = 02 and the Deferred Payment Start Date (the date the first payment is due). If the exact day is not available, use the first of the month.
- Terms Duration (Field 13): for installment accounts, report the number of months of the loan. For accounts where payments have not begun and the repayment term has not started, some furnishers report blank per guidance. Follow your CRA-specific instructions.
2) During the deferment period (ongoing months)
- Continue reporting Terms Frequency = “D” and Scheduled Monthly Payment Amount = zero.
- Continue reporting Account Status 11 (the consumer has no payment obligation and is not delinquent).
- Continue reporting the K4 Segment with the deferred payment start date each month the account is reported.
- Payment History Profile (PHP): for months where no payment is due, Metro 2 guidance supports reporting “D” in the PHP positions representing those months (no payment history reported/available this month). This is appropriate because there is no payment performance to represent.
3) When the deferment period ends and payments begin
- Terms Frequency: change from “D” to the applicable frequency code (for example, “M” for Monthly).
- Scheduled Monthly Payment Amount: report the actual payment amount now due.
- Account Status: report based on whether the consumer makes the first payment on time. If the first payment is made within 29 days of the due date, report Account Status 11 (Current).
- K4 Segment: stop reporting the K4 Segment once the deferment period has ended and payments have begun (unless the account also has a balloon payment, in which case K4 would continue with the balloon payment information).
- PHP: begin incrementing based on the Account Status reported in prior months. The deferment months should remain as “D” in the trailing PHP positions.
4) If the deferred payment start date changes
If the deferment is extended (for example, a student loan deferment is renewed or a construction loan timeline shifts):
- Update the Deferred Payment Start Date in the K4 Segment to reflect the new projected date.
- Continue all other fields as described above (Terms Frequency = “D”, Scheduled Monthly Payment = zero, Account Status 11).
K4 Segment field requirements (quick reference)
| Field | Value |
| Segment Identifier | K4 |
| Specialized Payment Indicator | 02 (Deferred Payment) |
| Deferred Payment Start Date | Date the first payment is due (MMDDYYYY) |
| Balloon Payment Due Date | Zero fill (not applicable for deferment) |
| Balloon Payment Amount | Zero fill (not applicable for deferment) |
The K4 Segment must be present each time the account is reported while the deferment applies. Only one occurrence of the K4 Segment can be appended to the Base Segment per record.
Compliance requirements (FCRA and Metro 2 alignment)
Under the FCRA, furnishers must report information that accurately reflects the terms of and liability for the account. For deferred accounts, this means:
- Do not report delinquency during a period where no payment is contractually due. Reporting a delinquent Account Status while Terms Frequency is “D” and Scheduled Monthly Payment is zero creates an internal contradiction that is both inaccurate and likely to trigger disputes.
- Do not omit the K4 Segment when reporting deferred accounts. Without it, the consumer reporting agencies cannot communicate to data users that the account has a future payment start date. This can lead to misinterpretation (for example, treating the account as if payments should have already begun).
- Ensure DOFD logic is correct. If an account is properly in deferment and no payment is due, there should be no delinquency and therefore no Date of First Delinquency. DOFD should be zero filled during deferment.
Impact on consumers
Consumers in legitimate deferment periods (students, construction borrowers, consumers in approved hardship deferment) should not see delinquency reported during months where no payment is required. Incorrect deferment reporting can suppress credit scores, create disputes, and undermine the purpose of the deferment arrangement. Conversely, failing to report the K4 Segment can confuse lenders evaluating debt-to-income ratios or payment readiness.
Conclusion
Deferred account reporting in Metro 2 requires three coordinated elements: (1) Terms Frequency set to “D” with a zero-filled Scheduled Monthly Payment Amount, (2) Account Status 11 reflecting that no obligation is due, and (3) the K4 Segment with Specialized Payment Indicator 02 and the projected payment start date. When deferment ends, transition all three elements to reflect the new payment terms and let the PHP preserve the deferment months as-reported.