Loans > Loan Screens > Credit Reporting > Coding of Derogatory Credit Status

Charge-off accounts are reported to credit repositories. When an account is charged off, the system does the following to the account:

1.Enters Action Code 94 and date of first delinquency on the Actions/Holds/Events screen/tab, if it isn't already there.

2.Sets Hold Code 2 (charge off).

3.Enters the charged-off date on the Actions/Holds/Events tab.

4.The General Category field is updated to 80, 82, 83, or 84.

5.Establishes the Original Charge-off amount during the credit reporting process on the Credit Reporting screen > Credit Reporting & Loan Information tab.

At monthend when the Credit Reporting screen is updated, the Account Status will be set to "97 - Charged off." The charged-off balance is the amount shown in the Principal Balance. An "L" (charge-off) will automatically be placed in the Payment Profile field for that month.

	WARNING: If you pay off a loan that should be reported as a charge-off loan prior to updating the Credit Reporting screen at monthend, the loan must have a Hold Code 2 or 95. The credit Account Status will show as a paid-in-full loan without these hold codes.

Note that the charge-off amount is not updated by the system each monthend.

Metro 2 guidelines require that the Scheduled Monthly Payment Amount (Base Segment Field 15) in the Credit Report be zero (0) for charged-off accounts. Therefore, the system will not report the Scheduled Monthly Payment Amount for charged-off accounts. However, if payments are made to an account, they will be reported in the Actual Payment Amount field (Base Segment Field 16).

If you choose not to keep the loan on the system for future tracking, a General Category change is not needed; however, all other items are essential. With Hold Code 2 on the account, the Credit Bureau Status at monthend would be 97 (charged off) and an "L" will appear for that month in the Payment Profile field.

Note: Charge-off amounts are only reported for either three months, or the number of months set up (in the Miscellaneous Parameter field) for the Credit Reporting Report and Transmission (FPSRP184), following the charge-off date unless the account has monetary activity. If the account is paid in full after having been charged-off, hold code 95 on the account causes the Credit Bureau Status of 64 (account paid in full was a charge-off) to be reported.

WARNING: Once the foreclosure, repossession, or charge-off process is completed, institutions vary in how they handle the account. Some institutions pay the account off and set up a General Ledger account to track it. Other institutions leave the loan as an open account and continue to monitor it from CIM GOLD.

Regardless of what your institution's procedures are, prior to monthend and the updating of the Credit Reporting screen, be sure the correct hold codes, charge-off date, and general categories exist on the loan. The system uses this information to determine the correct status of the account.

Once these codes are entered, the system will update the Credit Reporting at or on monthend. This updating creates the account status, payment profile, balance, etc.

If you pay the loan off, the loan would be reported for 90 days after the payoff date. However, if you leave the loan open, then it would be reported each month or until you uncheck the Report to Credit Bureau box.

See the Charge-off Transaction (Tran Code 2022-01) for more information on charging off a loan.

Reporting an Account as a Charge-off

Reporting an Account as a Charge-off