Another data firm plans to seek regulatory certification as a credit bureau for payday lenders.
FactorTrust in Roswell, Ga., intends to file a proposal with the Consumer Financial Protection Bureau to be a registered information system. The CFPB wants payday, auto-title and installment lenders to file reports on its individual customers with these information systems and to pull reports from the bureaus when making loan decisions.
The CFPB wants the private sector to develop a credit-reporting system for payday lenders, because the three largest credit bureaus—Equifax, Experian and TransUnion—don't collect information on subprime consumers.
The CFPB's proposed rules for the payday loan industry include a requirement for lenders to verify a potential borrower's ability to repay. FactorTrust, which was established in 2005, has more data on subprime consumers than any other data firm, Chief Executive Greg Rable said. That will give it an edge on other competing credit bureaus, he said.
FactorTrust has also developed a technology to allow payday lenders to file consumer credit reports in real time and in a single format, which will help lenders avoid the expense of filing reports to multiple bureaus, Rable said.
Other companies have indicated interest in seeking CFPB certification as a payday-loan information system include Clarity Services in Clearwater, Fla., and Veritec in Jacksonville, Fla.
The CFPB's proposed rules are subject to change after it receives input from interested parties. The public comment period ends on Oct. 7.