The Metro 2 file format is a special database file format used by furnishers to report credit information to the credit bureaus.
The Metro 2 format is designed for credit reporting only. In other words, it's main purpose is communicating data to the three major credit bureaus. Through the CDIA (Consumer Data Industry Association, Inc) the bureaus have designed the Metro 2 file format to provide a uniform platform for reporting credit to all three bureaus.
While a uniform file format for reporting to the credit bureaus ought to help with consistency and accuracy in credit reporting, the system still has its limitations.
In this article we’ll talk about some of these limitations and how they affect your credit.
It’s important to understand that the Metro 2 format is JUST for reporting, and nothing else. The credit bureaus still have their own algorithms for parsing, categorizing, and matching data. The credit bureaus still have their own systems and formats for storing and retrieving data. What this means is that just because the reporting format is "uniform", the resulting data sets will not necessarily be as cohesive. What the credit bureaus are hoping you won’t realize is that this system of reporting puts MORE accountability for data accuracy on the credit bureaus as opposed to the creditors.
Let me explain…
For the sake of illustration, let’s pretend that each credit bureau has their own reporting format. Each bureau specifies what data is required for them and what fields are required from the creditor. Under this system, the creditor would have to adjust their reporting for each bureau. More pressure would be on the creditor to "get it right".
Instead, the creditors have a relatively easy job.
They have to report everything in ONE format with somewhat loose restrictions for field requirements and data completeness. What this means is that each bureau then has to take these generic databases, with varying degrees of completeness, and ATTEMPT to match the reported data up with existing data in their systems. The end result is that even though the EXACT SAME DATA gets sent to all three bureaus, the actual credit reports of each consumer could end up looking quite different. And as long as the data has been reported accurately, any discrepancies between bureaus are (in theory) the fault of the credit bureaus because they result from a failure to accurately analyze and match the data.
The CDIA states that when ALL fields are used CORRECTLY and reported CONSISTENTLY, "compliance with legislation is ensured".
That’s a statement about what the Metro 2 format COULD do.
IF (and that’s a big IF) the creditors would report complete data and do it consistently, they would be in compliance with the law.
However, the format specification doesn’t REQUIRE that they do that.
Certain amounts and dates are only "required when applicable" which gives creditors the option of leaving data out of it can be deemed as not applicable.
This is probably how some creditors have justified leaving off credit limits and similar underhanded tactics.
The point of this is that just because the format is uniform and provides a platform for legal compliance, it doesn’t mean that creditors are going to use it uniformly or meet their reporting requirements under the law.
One final thing that the credit bureaus would rather you NOT know about the Metro 2 format is that because they CONTROL the format and its accompanying documentation, they have opportunities to influence the reporting of data to meet their own needs.
Credit bureaus profit more from consumers with "bad credit" than they do from those with "good credit". Exactly why that is so is beyond the scope of this article, but like it or not, it’s the way it is.
In subtle ways the credit bureaus’ control of the credit reporting format has resulted in a system that errs on the side of bad credit.
All sorts of reporting errors and inaccuracies are possible under this system, and they are NEVER helpful to the consumer’s credit score.
If more data were required and some basic file format specifics were strictly enforced, the result would be more accurate data, less mixed and merged files, and less consumers with errors on their credit report.
The bureaus’ influence over the credit reporting system also makes it more difficult for consumers to get errors corrected.
For example, the bureaus strongly discourage deletion of any data in the Metro 2 docs. More data means more money for the credit bureaus, so they want to keep as much of it as possible.
In recent years the Metro 2 format and issues with inconsistencies in reported fields have been getting some attention, as reflected in senate testimony from the last several years.
Recent changes in laws seem to reflect that lawmakers have noticed some of the issues created by these inconsistencies, and have possibly attempted to address those issues with changes to the law.
Will these changes really help? Only time will tell.