An estimated 43 million consumers have medical collections on their report. Debt collection is the top complaint to the Consumer Financial Protection Bureau and among all types of debt, medical collection has the highest complaints. Over 52% of all collection accounts on credit reports are medical.
CFPB Report: SHARE OF COLLECTIONS ON CREDIT REPORTS BY TYPE
Click here to see the full CFPB report.
The current FICO credit scoring algorithms treat medical and non-medical debts the same and over-penalize those who have medical debt. Consumers with a FICO score of 680 could see a score drop of 45-65 points. A score of 780 could drop 105-125 points. The CFPB’s May 2014 data determined medical debt is not as good a predictor of a consumer’s likelihood of paying a debt as was previously believed.
Half of medical collections are under $207 indicating the consumer likely has the ability to pay. The reason medical collections end up on credit reports is due to a lack of accountability and standards for collections practices in the medical, insurance and collection industries.
The CFPB is pushing for changes, but it will take time. Are you dealing with medical collections? We can help you. Please give us a call any time for a free consultation.