“This is an important step to support consumers in the wake of the Covid-19 pandemic,” the companies said in a joint statement. “These changes reflect our ongoing commitment to helping facilitate access to fair and affordable credit for all consumers.”
More like, it reflects the pressure that the CFPB’s director Rohit Chopra has been putting on the companies for the past year. “As the CFPB is our primary regulator, we have continual engagement with them on a variety of issues,” a TransUnion spokesman said. Uh, huh.
In early March, the agency released a report on medical debt burden, identifying it as “the most common collection tradeline reported on consumer credit records.” As of June 2021, their research found, there was an astounding $88 billion in medical debt on consumer credit records. That’s just the medical debt in collections that’s furnished to the credit reporting companies.
“America’s credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors,” CFPB Director Chopra said in unveiling the report. “Today’s report is further evidence of the serious harms stemming from their faulty financial surveillance business model.”
In 2021, they found, “58% of all third-party debt collection tradelines were for medical debt, making medical debt the most common debt collection tradeline on credit records.” In particular, they found, “young adults, people with low incomes, and Black and Hispanic people are disproportionately likely to have medical debt. Veterans and older adults are also significantly impacted by medical debt.”
Kaiser Family Foundation has also been researching the issue, releasing their own report this month. They find that “23 million people (nearly 1 in 10 adults) owe significant medical debt. The [Survey of Income and Program Participation (SIPP)] suggests people in the United States owe at least $195 billion in medical debt.” Their findings suggest that about “16 million people (6% of adults) in the U.S. owe over $1,000 in medical debt and 3 million people (1% of adults) owe medical debt of more than $10,000.” Their findings mirror the CFPB research, in finding that Black and Hispanic population, low-income people, and the uninsured carry the highest burden of debt.
The CFPB, even through the years of the previous administration, has been showing that government can effectively fight for everyday Americans. Even counting those years, by the end of 2020, the CFPB had secured $12.9 billion in consumer relief in refunds, principal reductions, canceled debts, and other consumer relief for 175 million people.
Not having to carry this debt on their credit ratings for years is a great thing. A better thing would be not being bankrupted by healthcare costs. That’s a fight for another day.