Some 43 million Americans have overdue medical debt on their credit reports, a cause for concern for the Consumer Financial Protection Bureau (CFPB), which has taken new steps to address the issue.
The CFPB is announcing Thursday that the major consumer reporting agencies will be required to provide regular accuracy reports to the agency on how disputes from consumers are being handled.
“It’s hard for consumers to navigate the medical debt maze and come out with a clean credit report on the other side,” said CFPB Director Richard Cordray, who is speaking at a field hearing Thursday. “The CFPB is taking action to improve credit report accuracy. Getting medical care should not make your credit report sick.”
Previously, FICO (NYSE: FICO) also recognized the impact of medical debt on consumers’ credit and updated its software to lessen this impact.
In a new report the CFPB is releasing in conjunction with its announcement, the agency finds that a staggering 52% of all debt on credit reports is from medical expenses and that one out of five credit reports contain medical debt in collections.
The systems for incurring, collecting and reporting this medical debt, the CFPB says, can create difficult challenges for consumers, which is why the agency is introducing new accountability for accurate credit reports.
“A top priority for the CFPB is to hold all players in the credit reporting market accountable for ensuring the accuracy of data in credit reports,” the agency says. “This applies to the furnishers of the information, to the credit bureaus, and to the creditors which often both furnish information and use credit reports.”
To read the CFPB report, click here.
Written by Emily Study