We are not aware of any regulatory requirements or prohibitions related to reporting loan information regarding cosigners to credit reporting agencies, other than the general requirement to report information that is accurate and complete.

We think it is helpful to define “cosigner” — a term that can apply to different types of loan obligations as used by bankers and others. Sometimes, the term “cosigner” refers to a co-borrower who co-signs the loan documents and is primarily liable for loan repayment. But the term “cosigner” sometimes refers to a guarantor who signs a guarantee and is secondarily liable for loan repayment. For example, under the Illinois Consumer Fraud and Deceptive Business Practices Act and the former federal Regulation AA, the term “cosigner” refers to a guarantor — someone who signs a loan without receiving goods, services, or money in return.

The Fair Credit Reporting Act (FCRA) and Regulation V require that information reported to credit reporting agencies be accurate and complete, but it does not specify which types of information must be reported. We do not believe that your bank would violate the FCRA or Regulation V by reporting accurate and complete information related to a loan with respect to a cosigner, whether that cosigner is primarily or secondarily liable for the loan.

Note that your bank must notify a cosigner of the primary borrower’s delinquency at least fifteen days before reporting adverse information about the cosigner to a credit reporting agency, as required by the Illinois Consumer Fraud and Deceptive Business Practices Act.

For resources related to our guidance, please see:

• Qualkenbush v. Harris Tr. & Sav. Bank, 219 F. Supp. 2d 935, 941 (N.D. Ill. 2002) (“The fact that there are so many different terms that can apply to one in plaintiff’s position — one who accepts some level of responsibility for another’s debt — often results in ambiguity. Terms such as ‘guarantor,’ ‘surety’ and ‘cosigner’ are frequently used interchangeably, as are ‘principal’ and ‘primary.’”)

• Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2S (“No person may report adverse information to a consumer reporting agency, provide information to a collection agency or take any collection action regarding a cosigner of an obligation unless prior thereto, such person has notified the cosigner by first class mail that the primary obligor has become delinquent or defaulted on the loan, that the cosigner is responsible for the payment of the obligation and that the cosigner must, within 15 days from the date such notice was sent, either pay the amount due under the obligation or make arrangements for payment of the obligation. In the event that the cosigner pays or makes arrangements to pay the obligation, no adverse information shall be reported regarding the cosigner.”)

• Regulation AA [this regulation has been repealed but is potentially enforceable under the Interagency Guidance Regarding Unfair or Deceptive Credit Practices], 12 CFR 227.12(b) (“(1) Cosigner means a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation, or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account. (2) Cosigner includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law. . . .”)

• Qualkenbush v. Harris Tr. & Sav. Bank, 219 F. Supp. 2d 935, 941 (N.D. Ill. 2002) (“Any signers who do not receive property, such as those whose purpose is solely to lend credit, are ‘cosigners’ under Section 2S.”)

• TransUnion, The Benefits and Issues of Co-Signing a Loan (“Co-signing on a loan or credit card is a serious matter that should not be entered into lightly. Essentially, when you co-sign on a loan, you are taking on legal responsibility for the account, and it will appear as your obligation on your credit report. Should the other person miss payments or default on the loan, your credit reports will show the delinquencies and the creditor may require you to pay.”)

• Experian, How Does Cosigning Affect Your Credit? (“Cosigning an account for somebody else can positively or negatively affect your credit depending on how the primary account holder manages their obligation. As with accounts you open for yourself, consistent, on-time payments may help your credit. However, if the account becomes past due or is sent to collections, that could hurt your credit. . . .”)

• FCRA, 15 USC 1681s–2(a)(1)(A) (“A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.”)

• FCRA, 15 USC 1681s–2(a)(1)(B) (“A person shall not furnish information relating to a consumer to any consumer reporting agency if— (i) the person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and (ii) the information is, in fact, inaccurate.”)

• FCRA, 15 USC 1681s–2(a)(2) (“A person who— (A) regularly and in the ordinary course of business furnishes information to one or more consumer reporting agencies about the person’s transactions or experiences with any consumer; and (B) has furnished to a consumer reporting agency information that the person determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that information, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains not complete or accurate.”)

• Regulation V, 12 CFR 1022.42(a) (“Each furnisher must establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information relating to consumers that it furnishes to a consumer reporting agency. The policies and procedures must be appropriate to the nature, size, complexity, and scope of each furnisher’s activities.”)

• Regulation V, Appendix E to Part 1022 – Interagency Guidelines Concerning Information Furnished to Consumer Reporting Agencies, Part I(b) (“A furnisher’s policies and procedures should be reasonably designed to promote the following objectives:

(1) To furnish information about accounts or other relationships with a consumer that is accurate, such that the furnished information:

• (i) Identifies the appropriate consumer;
   
• (ii) Reflects the terms of and liability for those accounts or other relationships; and
   
• (iii) Reflects the consumer’s performance and other conduct with respect to the account or other relationship. . . .”)