How should a seller and purchaser each report accounts that have been sold to another company, and how does the reporting differ depending on whether the purchaser converts the seller’s prior account history?
Account sales are a routine part of portfolio management, but they are one of the most common sources of duplicate tradelines, broken Date of First Delinquency chains, and consumer confusion on credit reports. Under Metro 2, the reporting responsibilities of the seller and purchaser depend on a single operational question: will the purchaser convert and report the seller’s prior account history, or will the purchaser only report going forward from the point of purchase? The answer determines which entity reports the account as “sold,” which entity reports the ongoing tradeline, and how payment history and DOFD continuity are handled.
Definitions and context
When accounts are sold (as opposed to transferred for servicing), ownership of the debt changes hands. Metro 2 provides two distinct reporting models:
- Model 1 (with history conversion): the purchaser takes on the seller’s prior history, converts it to their system, and reports one tradeline that carries forward all prior performance data. The seller does not report the accounts as sold.
- Model 2 (without history conversion): the seller reports the accounts with a final “sold” disposition, and the purchaser begins reporting a new tradeline from the point of purchase going forward. This results in two tradelines on the consumer’s file: one historical (from the seller) and one ongoing (from the purchaser).
Both models require coordination between seller and purchaser to avoid duplication, DOFD breaks, and PHP conflicts.
Model 1: Purchaser converts the seller’s history
Seller responsibilities
If the purchaser is converting account history and will report the prior payment performance:
- The seller should not report the accounts as sold.
- Discontinue reporting the accounts after the final regular reporting period.
- Reporting by the purchaser should begin in the following month’s reporting period (no gap, no overlap).
Purchaser responsibilities
The purchaser reports one tradeline that carries the seller’s history forward:
- Identification Number: report the seller’s Identification Number in the Base Segment (this is the number the account was previously reported under).
- Consumer Account Number: report the seller’s original Account Number in the Base Segment.
- Date Opened: report the date the account was originally opened with the seller (do not use the purchase date).
- Account Status: report the appropriate status as of the Date of Account Information.
- Payment History Profile: report the payment history provided by the seller. This should reflect the actual performance history, not placeholder values.
- DOFD: if the account is delinquent or derogatory at the time of purchase, report the date of the first 30-day delinquency with the seller that led to the status being reported. If the account is current and in a bankruptcy petition, report the bankruptcy petition or notification date. If the purchaser cannot obtain the DOFD from the seller, do not report the account.
- K2 Segment: report with Purchased From/Sold To Indicator = 1 and the name of the company from which the account was purchased.
- L1 Segment: report with Change Indicator = 3 (both Account Number and Identification Number change), the new Consumer Account Number assigned by the purchaser, and the new Identification Number. In subsequent reporting periods, the purchaser’s numbers should appear in the Base Segment.
- Consumer Information Indicator: report the bankruptcy indicator when applicable. Do not report purchased accounts that were included in discharged or completed bankruptcies.
Model 2: Purchaser does NOT convert the seller’s history
Seller responsibilities
Since the purchaser will not carry forward historical data, the seller must report the accounts as sold to preserve the historical record:
- Scheduled Monthly Payment Amount: zero.
- Account Status: the appropriate code that specifies the status at the time of sale.
- Special Comment: report “AH” (Purchased by another company).
- Current Balance and Amount Past Due: zero (the seller no longer holds the debt).
- Date of Account Information: the date the account was sold. This is considered a final disposition for credit reporting purposes. In subsequent reporting periods, discontinue reporting the account.
- DOFD: if the account is delinquent or derogatory at the time of sale, report the date of the first 30-day delinquency that led to the status being reported. If the account is current and in a bankruptcy petition, report the petition or notification date.
- Date Closed: the date the account was sold. If the account was closed before being sold, report the original date it was closed to further purchases or use.
- Consumer Information Indicator: report the bankruptcy indicator when applicable.
- K2 Segment: report with Purchased From/Sold To Indicator = 2 and the name of the company to which the account was sold.
Do not report accounts as sold that were previously reported as paid in full. Doing so creates unnecessary consumer confusion and disputes.
Purchaser responsibilities
The purchaser reports a new tradeline from the point of purchase:
- Consumer Account Number: the newly assigned account number.
- Date Opened: the date opened with the seller (preferred). If the date opened with the seller is not available, the date the account was purchased may be reported.
- Account Status: the appropriate code as of the Date of Account Information.
- Payment History Profile: report character “B” for months when the account was owned by the seller. Do not report payment history that occurred with the seller. The seller’s historical tradeline (reported as sold) already contains that performance data.
- Date of Account Information: follow standard Metro 2 guidance. Reporting by the purchaser should begin in the following month’s reporting period, after the seller reported the accounts as sold.
- DOFD: if the account is delinquent or derogatory at the time of purchase, report the date of the first 30-day delinquency with the seller that led to the status being reported. If the purchaser cannot obtain the DOFD from the seller, do not report the account.
- Consumer Information Indicator: report the bankruptcy indicator when applicable. Do not report purchased accounts that were included in discharged or completed bankruptcies.
- K2 Segment: report with Purchased From/Sold To Indicator = 1 and the name of the company from which the account was purchased.
Compliance requirements (FCRA alignment)
The FCRA requires furnishers to report information that is accurate and to correct or update information when necessary. For sold accounts, the highest-risk compliance issues include:
- Duplicate tradelines: if both seller and purchaser report the same account with overlapping history, the consumer’s file will show two tradelines for one obligation. This inflates debt obligations and distorts utilization.
- Broken DOFD chains: if the purchaser reports a DOFD that differs from what the seller established, the obsolescence clock can be improperly reset. This is a recurring source of FCRA litigation.
- Purchaser reporting seller’s payment history (Model 2): Metro 2 guidance is explicit that the purchaser should not duplicate the seller’s performance data in Model 2. PHP should be B-filled for the seller’s period.
- Missing DOFD: if the purchaser cannot obtain the DOFD from the seller, Metro 2 guidance says do not report the account. Guessing or fabricating a DOFD is an accuracy violation.
Impact on consumers
Portfolio sales can be disorienting for consumers who suddenly see a new furnisher name on their credit report. Clear, non-duplicative reporting reduces disputes and helps consumers understand which entity holds the obligation. The most common consumer complaints from sold accounts are:
- “I see two accounts for the same debt”
- “My payment history disappeared” (or appeared twice)
- “The new company is showing a different delinquency date”
All three are preventable with proper coordination between seller and purchaser.
Conclusion (key takeaways)
Sold account reporting under Metro 2 depends on whether the purchaser converts the seller’s history. In Model 1 (with conversion), the seller discontinues and the purchaser picks up the full tradeline with an L1 and K2 Segment. In Model 2 (without conversion), the seller reports a final “sold” disposition and the purchaser starts fresh with B-filled PHP and no duplicated history. In both models, DOFD continuity from the seller is non-negotiable, and furnishers should coordinate timing to avoid gaps or overlaps.