Overcome 3 Data Validation Challenges for Accurate Credit Reporting

This blog shares furnishers’ top three common challenges relating to consumer reporting data and highlights an approach to data validation that ensures credit reporting accuracy.

Data Validation: The Critical Path on Your Consumer Reporting Journey

Data accuracy is a key issue for furnishers and for the federal agencies that regulate them. Bridgeforce recommends an 8-Stage Data Validation Process to ensure that data is accurately represented in consumer credit reports.

This proven process was developed in collaboration with data furnishers. We built it on best practices observed from decades of industry experience remediating furnishing inaccuracies and implementing preventive actions for clients.

A combination of controls before and after file transmission provide a feedback loop that continually improves data accuracy.

Here are furnishers’ common accuracy challenges and how to manage them with our 8-stage validation process. When followed, the process supports increased furnishing accuracy, reduces the risk of regulatory action, decreases dispute volumes and improves overall consumer satisfaction.

3 Common Challenges Affecting Data Accuracy

Let’s look at three common challenges impacting data furnishers today and how a thorough approach to data validation helps avoid them:

1. Accurate account information in your system of record (SOR) doesn’t translate correctly to the Metro 2^® file sent to Nationwide Consumer Reporting Agencies (NCRAs). [Stages 1–4 of Process]

A detailed data mapping of SOR fields to the Metro 2^® file can identify the root cause of this type of error. Even better, strong system documentation and regression testing helps prevent errors in file generation. The trickiest part is identifying errors in the Metro 2^® file itself, prior to data submission.

Identify anomalies before submitting the file to NCRAs with a pre-transmission review of data elements and file statistics. A simple month-over-month review of account volumes and statuses can help.

But, if you want speed and efficiency, you need more. A tool like the Bridgeforce Data Quality Scanner® Solution  identifies a range of account level discrepancies. You can use the time you earned from an automated scan to perform root cause analyses and remedy issues before file transmission.

2. Information furnished doesn’t arrive and process as expected [Stages 5–6 of Process]

Confirming data arrival at NCRAs is straightforward and very necessary to ensure accurate reporting. Simply confirm receipt and review file statistics  against the information from reporting agencies. (E.g., # of accounts, count of account types and of portfolio types.)

You can take an additional step to a more comprehensive approach.  Validate information found in monthly statistics (aka “reject and error”) reports provided by NCRAs. Then, you can identify potential issues in file composition or transmission.  A simple review of these standard reports can help expose errors in your file.

3. Furnished data is interpreted differently than expected [Stages 7-8 of Process]

After you’ve evaluated SOR mapping and reviewed the file in Metro 2^® format prior to submission, check the following areas. These actions help confirm that your furnished account data in consumer credit files appears as you expected.

Each NCRA applies a set of rules to your Metro 2^® files. Once their data transformation rules are in place, they tend to remain static, especially if you have custom transformation rules.  Changes in your internal processes and systems may mean the static rules are impacting your data in unexpected ways. Ultimately, they will continue to impact how you report customer data if you are making changes to SORs, changing data mapping or updating reporting processes.

Some clues are in the reject and error reports, but the key to understanding how NCRA rules are impacting your reporting lies in a more hands-on analysis. An annual data audit with each NCRA will provide insights on how they interpret your data. Work with each NCRA to understand existing rules and when—and why—changes are made at the NCRA. This could identify if any of the processing rules in place at your institution should be modified or eliminated.

Supplement the annual data audit with a monthly (or quarterly) review of a sample of furnished trade lines as they appear in consumers’ files at the NCRAs. Then, you can potentially spot new or emerging issues.  Each of the NCRAs offers tools for furnishers to conduct this periodic review.  Examining a random sample across various portfolios and account statuses will provide additional assurance that your data was interpreted and posted as expected.

Validation is Very Achievable—and Necessary—for Pre- and Post-Transmission

I’ve shared some points on areas of validation that should happen with every furnisher. But it takes the full 8-Stage Process and all that it encompasses to be sure your data is accurate. A lot of effort goes into each stage of the process. The effort is worth it.

Detecting issues alone is not enough. Discrepancies need to undergo a root cause analysis. Then, once identified, you can fix the underlying issue.

A comprehensive set of pre- and post-transmission data validations can help protect customers from incorrect data on their credit report. And hopefully help prevent subsequent disputes if you find incorrect data. Most importantly: you are not inadvertently causing customer harm.

Contact Bridgeforce to learn more about the 8-Stage Reporting Validation Process that we recommend for all data furnishers.