Report based on information furnished to credit bureaus reveals more than one in four consumers with a credit report also have at least one debt in collection.
7/18/2019 14:00
Medical, telecommunications and utilities debts represent most third-party collections tradelines (information about a consumer account sent to a credit reporting company), according to a new report from the Consumer Financial Protection Bureau.
Tradelines tracked in the report “Market Snapshot: Third-Party Debt Collections Tradeline Reporting” include data such as a consumer’s account balance, payment history and account status.
The medical, telecommunications and utilities debt tradelines are classified by the CFPB as “non-financial debt.” More than half (58%) of these tradelines represent medical debt and another 20% are for telecommunications or utilities debt, according to the CFPB.
Overall, the report shows that more than one in four consumers with a credit report have at least one debt in collection by third-party debt collectors, according to a news release on the research.
It also specifies findings on debt buyer and non-debt buyer tradeline information provided to credit bureaus.
Additional key findings as of second quarter 2018 include:
- About two-thirds of non-buyer tradelines indicated medical debt. In contrast, buyer tradelines primarily indicated banking, retail and financial debt while only 1% of buyer tradelines showed medical debt. Medical debt accounted for 58% of total third-party collections tradelines.
- Although the number of third-party collections tradelines in the CFPB’s sample has increased over the last 15 years, the number of collectors furnishing such tradelines has declined 60% from its peak. There are an estimated 9,330 debt collectors and debt buyers in the U.S., but the CFPB’s sample only had 898 furnishers of third-party collections tradelines in second quarter 2018.
- Over one in four consumers in the sample had a third-party collections tradeline on their file. Between second quarter 2004 and second quarter 2018, the percentage of consumers in the sample with a third-party collections tradeline on their file never went below 27% or above 34%.
The report covers 2004 to 2018, and the data comes from the bureau’s Consumer Credit Panel (CCP), a nationally representative sample of approximately 5 million de-identified credit records maintained by one of the three nationwide credit reporting companies. Close to 900 third-party debt collectors furnished collection tradelines in the CCP, according to the CFPB.
The CFPB notes in the report that the data do not allow for a conclusion on the cause of the effects observed.