CFPB releases report on third-party debt collections

The Consumer Financial Protection Bureau released a report that found that more than one-in-four consumers with a credit report have at least one debt in collection by third-party debt collectors.

The report, which covers 2004 to 2018, is drawn from the Bureau’s Consumer Credit Panel (CCP), a nationally representative sample of approximately 5 million de-identified credit records maintained by one of the three nationwide credit reporting companies. Close to 900 third-party debt collectors furnished collection tradelines in the CCP. A tradeline is information about a consumer account that is sent, generally on a regular basis, to a credit reporting company. Tradelines contain data such as account balance, payment history, and status of the account.

The findings show that more than one-in-four consumers (28%) with a credit report in the CCP in 2018 had at least one third-party collections tradeline on their file. The study also found that more than three-out-of-four third-party collections tradelines are for non-financial debt. More than half (58%) of these tradelines are for medical debt and another 20% for telecommunications or utilities debt. Positive payment information is generally not furnished for medical or telecommunications debt. 

Banks and other original creditors may collect their own debts or hire third-party debt collectors. In some instances, the original creditors may sell the debts to debt buyers. The buyers may try to collect on these debts or hire other third-party debt collectors. There are approximately 9,330 debt collectors and debt buyers in the United States.

View the report: “Market Snapshot: Third-Party Debt Collections Tradeline Reporting.”