WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has released research showing 15 million Americans still have medical bills on their credit reports despite changes by Equifax, Experian, and TransUnion.
According to the CFPB, the 15 million Americans disproportionately live in the South and low-income communities and collectively have more than $49 billion in outstanding medical bills in collections.
The new data was released as part of the CFPB’s second analysis of the changes made by the three national credit reporting companies to reduce the number of medical bills on credit reports, and follows what the Bureau said is the start of a CFPB rulemaking that will “consider options to restrict the reporting of allegedly unpaid medical bills on credit reports.”
‘Little Predictive Value’
“Experian, Equifax, and TransUnion took steps to remove many medical bills in part because of the recognition that they hold little predictive value,” CFPB Director Rohit Chopra said in a statement. “Findings from our latest research reveal the impact of these changes and the need for further reforms.”
As CUToday.info reported earlier, in early March 2022 a CFPB study found an estimated $88 billion in medical bills on Americans’ credit reports.
“Following that study, the three nationwide credit reporting companies – Equifax, Experian, and TransUnion – announced they would no longer report certain medical bills in collections,” the CFPB said. “The companies announced they would increase the time before medical bills in collections can appear on credit reports – from 180 days to one year. Second, the companies would stop reporting medical bills that had been in collections but were resolved. Third, the companies would remove medical bills below $500 from credit reports.”
The New Findings
According to the CFPB, the new research found
the number of people with medical bills in collections on their credit reports has declined. As of June 2023, about 5% of Americans had unpaid medical bills on their credit reports – down from 14% in March 2022.
Older Americans saw the largest improvement – 8.4% of older Americans had medical bills on their credit reports in March 2022 compared to below 3% in June 2023.
The Findings
For the 15 million Americans with medical bills on their credit reports, the CFPB said the new research found:
- Many live in low-income communities and the southern United States. “The credit reporting changes were slightly less likely to help Americans in lower-income communities compared to those in higher-income communities. The changes did not do as much for individuals residing in the South. On average, people living in the South continue to have the most medical bills in collections and for the largest dollar amounts.”
- The average medical balance on credit reports increased from $2,000 to over $3,100. “The credit reporting changes primarily removed smaller balances. As a result, the average balance of the remaining reported medical bills increased,” the CFPB reported.
- Most medical collections balances stayed on credit reports. “The three national credit reporting companies removed many bills, and many people now have no remaining medical bills on their credit reports. However, a majority of medical collections balances remain on credit reports.”
The CFPB said it will continue to prioritize fixing the credit reporting market, including issues that involve the reporting of medical bills.
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