Earlier this week, the Consumer Financial Protection Bureau (CFPB or Bureau) released its second report detailing changes in the credit reporting of medical debts made by the three national consumer reporting agencies (CRAs) to reduce the number of medical bills on credit reports. Overall, the CFPB found the changes in the reporting of medical collections have led to a significant reduction in the number of consumers with tradelines relating to medical debts on their consumer reports. However, the total balances of medical collections on consumer reports only fell by 38% nationwide.

The CFPB’s key findings in this report include:

• By June 2023, only 5% of consumers with a credit record had a medical collection on their consumer report, down from around 14% in March 2022.
• Consumers with medical collections remaining on their consumer reports have lower credit scores, and reside in lower income census tracts, compared to the larger population that had medical collections on their consumer reports before the reporting changes.
• The average medical collections balances per remaining consumer increased from around $2,000 to over $3,100. Since the changes primarily removed smaller balances, the average balance of the remaining reported medical bills increased.
• The share of older Americans with medical collections on their consumer reports fell by more than two thirds between March 2022 and June 2023, from 8.4% to just 2.7%, the largest proportionate decline of any age group.
• Despite many medical collections items being removed, a majority of medical collections balances remain on consumer reports.
• States in the South had the most medical collections balances prior to the reporting changes, and generally had the smallest amount of balances removed and the largest shares of consumers with medical collections still remaining on their consumer reports.

In March 2022, the CRAs announced that they would no longer report certain medical collections. The changes, which took effect on July 1, 2022, increased the period before unpaid medical collections could appear on a consumer report from 180 days to one year. Additionally, paid medical collections would no longer appear on consumer reports. Starting from April 1, 2023, unpaid medical collections with balances below $500 would also no longer appear on consumer reports.

Despite these changes, the CFPB’s research shows that 15 million Americans still have medical bills on their consumer reports. These individuals predominantly live in the South and low-income communities, and collectively, have more than $49 billion in outstanding medical bills in collections.

The CFPB report also found that the share of consumers with medical collections on their credit records fell more than was forecasted. The report attributes this to two factors: the inability of the CFPB report to account for collections that were between 180 days and a year past due, and a continuing trend toward fewer medical collections being reported. However, the report also found that the credit reporting changes disproportionately benefited consumers in certain states, specifically those living in majority-white and high-median-income census tracts.

The CFPB is again showing its heavy focus on the credit reporting ecosystem, in particular the reporting of medical bills. This report also follows the start of a CFPB rulemaking that will consider options to restrict the reporting of allegedly unpaid medical bills on credit reports, which we have been discussing extensively, for example here and here. On the enforcement front, the CFPB recently took action against illegal nursing home debt collection practices, as well as against medical debt collection and credit reporting practices that violate the No Surprises Act. The CFPB has also taken actions against entities engaged in illegal medical debt collection practices. The CFPB shut down Commonwealth Financial Systems for illegal medical debt collection practices, discussed here. The CFPB also ordered Phoenix Financial Services to pay millions in redress and penalties for attempting to collect disputed medical debts through unlawful collection letters and misrepresentations, discussed here.