Medical debt is hurting the creditworthiness of 43 million Americans, and the systems in place to collect and report this debt can be challenging for people, according to a new report released on Thursday by the Consumer Financial Protection Bureau (CFPB).
"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 in a statement. "Getting medical care should not make your credit report sick." The CFPB study concluded that the process of billing for medical care can be confusing and the system for reporting overdue medical debt is haphazard. This could explain why half of all overdue debt on credit reports is now for medical expenses.
The report says one out of five credit reports now contains a black mark from overdue medical debt. The major credit reporting agencies will now be required to provide the bureau with regular reports about how consumer disputes are being handled. They will also be expected to investigate companies that have abnormally high dispute rates and do something about it. The CFPB has information on how to deal with medical debt, both before it goes on a credit report and after.
Other findings of the report include:
- 15 million consumers have only medical debt on their credit reports: Seven percent of all consumers have medical debt and no other collection items on their reports, and they tend to be more reliable bill payers than consumers with other types of collections on their credit reports.
- The average reported medical debt is $579: The average unpaid, non-medical collections item on a credit report is $1,000. But unpaid medical collections are smaller, with an average of $579 and a median of $207.
--Additional reporting from CNBC.com