86M Drop Over Four Years In Accounts In Collections

Mortgage News February 24, 2023

An analysis of credit reporting trends for debt in collections between 2018 and 2022 by the Consumer Financial Protection Bureau (CFPB) indicates that the number of accounts in collections decreased 33% during the period, falling to 175 million tradelines from 261 million tradelines. A 20% decrease in the share of consumers with collections on their credit reports was seen over the same period.

As part of the CPFB’s report, additional information was released that examined the factors that may contribute to the decline in medical collections accounts and increase the likelihood of inaccurate medical collections reporting.

An analysis of credit reports reveals yet another indicator of household financial distress reducing during the pandemic thanks to a strong labor market and emergency programs according to Rohit Chopra, CFPB Director. In spite of this, the presence of false and incorrect medical debt on credit reports continues to hamper household finances.

Tradelines of collections are provided by third-party debt collectors to credit reporting companies. A common collection item is a medical account, as well as a rental or leasing account, a credit card account, and a utility account. There are two types of third-party collectors: those who collect fees on behalf of the original creditor (“contingency-fee-based debt collectors”), and those who buy the account directly from the creditor (“debt buyers”).

The CFPB conducted this research using its Consumer Credit Panel, which consists of five million anonymized credit records that are reflective of the population as a whole. The study updates a previous one that was completed in 2019.

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