The Consumer Financial Protection Bureau has made it a top priority to reveal some of the shadier practices harming consumers when it comes to debt collection. This year, the agency is pointing its spotlight on the complexities of medical debt, and its impact on credit scores.
About 43 million Americans have overdue medical debt on their credit reports, and because medical debt is incurred differently than other types of debts, the CFPB recognizes the unpredictability and confusion that can result from unpaid medical bills and their affect on credit scores.
According to the CFPB, half of all overdue debt listed on credit reports is medical debt, and 20 percent of all credit reports contain overdue medical debt.
Among the most concerning practices the CFPB found in its study is the troubling range of accuracy of collection information on credit reports; third party collectors are using varying standards of when debt should be reported, leading to significant inaccuracies found on consumer credit reports.
As such, the CFPB announced at the event that it will now require regular accuracy reports from major consumer reporting agencies. These reports, the bureau hopes, will offer a more accurate picture of which furnishers are faced with the most disputes regarding debt reporting.
FICO, reported on the CFPB’s latest objectives in medical debt, took the event as a chance to highlight its latest credit score version, FICO Score 9. The score is its “most predictive” yet, and differentiates between medical and non-medical debts, FICO said.
The CFPB’s crackdown on confusing and unfair practices in medical bill reporting follows last October’s announcement that the agency would examine banks’ policies regarding opening consumer checking accounts. That focus, reports said, involved probing practices in overdraft protections and how financial institutions use credit scores to gauge consumer credit risks.