The CFPB’s Office of Research released a report showing findings that medical debt that goes into collections and shows up on credit reports may result in over-penalization with regard to consumer credit scores. The study highlights the fact that certain credit scoring models might underestimate the creditworthiness of consumers who owe medical debt that has gone to collections. Such scoring models, according to the report, also might not be appropriately crediting consumers for repayment of that debt. The report notes that many of the complaints that it has received on the topic indicate that consumers are often unaware that their medical debt is in collection until they are contacted by a collection agency or otherwise discover that fact on their credit report. The report made two specific observations with respect to the adequacy of credit scoring model treatment of medical debt in collection: (1) credit scores might underestimate creditworthiness by 10 points for such debt and (2) credit scores might underestimate creditworthiness by up to 22 points after the medical debt has been repaid.

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