CFPB: 1 in 4 Consumers Have at Least One Debt in Collection

The Consumer Financial Protection Bureau released a report yesterday saying more than one in four consumers with a credit report have at least one debt in collection by third-party debt collectors.

The report, Market Snapshot: Third-Party Debt Collections Tradeline Reporting (https://content.consumerfinance.gov/data-research/research-reports/market-snapshot-third-party-debt-collections-tradeline-reporting/) shows28 percent of consumers with a credit report in 2018 had at least one third-party collections tradeline on their file. The study also found that more than three out of four third-party collections tradelines are for non-financial debt. More than half (58 percent) of these tradelines are for medical debt, while another 20 percent for telecommunications or utilities debt.

The report covers 2004 to 2018 and is is drawn from the Bureau’s Consumer Credit Panel, a nationally representative sample of five million de-identified credit records maintained by one of the three nationwide credit reporting companies. Nearly 900 third-party debt collectors furnished collection tradelines in the CCP.

A tradeline is information about a consumer account that is sent, generally on a regular basis, to a credit reporting company. Tradelines contain data such as account balance, payment history, and status of the account.

The report noted banks and other original creditors may collect their own debts or hire third-party debt collectors. In some instances, the original creditors may sell the debts to debt buyers. The buyers may try to collect on these debts, or hire other third-party debt collectors. The report identified 9,330 debt collectors and debt buyers in the United States.