Big Changes in Medical Debt Reporting

medical debt collectionThe National Consumer Assistance Plan (NCAP) has been making big waves in the area of credit report accuracy. As a reminder, the initiative, started by the three consumer credit reporting companies – TransUnion, Experian, and Equifax – aims to ensure the most accurate credit reports possible. For more information about the NCAP, check out our previous blog post or visit their website.

One of the plan’s reforms focuses on combating the inaccuracies in credit reports that are caused by medical debt.  In a study by ACA International, called “The Role of Third-Party Debt Collection in the U.S. Economy”, of the debt collected by third party agencies, 38% was medical. With such a large market in medical debt, the changes that the NCAP has instituted will prove to be significant.
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Customer Service – When Less May be More

Traditionally, “customer service” meant paying more attention to the consumer. However, in some cases it may actually mean paying less attention – at least from a human to human perspective. A different form of service is increasingly being requested – self-service.

At one time, customer service representatives were the primary provider of information and consumers needed to contact them as a key source for that information. Now that same information is often just a click away. Additionally, a company representative was almost always needed to complete a transaction.
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The Importance of a Credit Policy Review

credit-policy-reviewWe talked about the Consumer Financial Protection Bureau and their proposed rulemaking for the debt collection industry in an earlier post. It is important to note that this proposed rulemaking will affect not just debt collection agencies; it will also affect the original debt owner – the creditor. The CFPB is focusing on data integrity to make sure collection agencies are receiving accurate data from their clients before they begin the collection process.

The CFPB states that “the most common debt collection complaint received by the Bureau concerns collectors seeking to recover from the wrong consumer or in the wrong amount.” They further state that they believe this stems in large part from “substantial deficiencies in the quality and quantity of information collectors receive at placement of the debt.”
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Cost of Living Outpacing Income

budgetWe took a look at NerdWallet’s 2016 American Household Credit Card Debt Study recently, which shows that overall US household debt has increased by 11% in the last decade. The increase is not driven by profligate spending, but by basic cost of living increases that have outpaced income growth. Medical and housing costs, in particular, are growing at a much faster pace than income. Consumers find themselves relying on credit cards to make ends meet. Households with credit card debt average $16,061 in balances, which costs them about $1,300 a year in interest.
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Credit Delinquency Rising in 2017?

new-carsUS consumers accumulated a record-setting $21.9 billion in credit card debt in the third quarter of 2016, the largest third quarter debt increase since 2007, according to the latest Credit Card Debt Study: Trends & Insights from WalletHub. What is even more concerning is that TransUnion’s 2017 Consumer Credit Market Forecast indicates that delinquency rates for credit cards and auto loans are expected to increase in 2017.
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Consumer’s Credit Access Experiences and Expectations Decline

bigstock-male-hand-showing-credit-card-19469411The Federal Reserve Bank of New York released results from its October 2016 Survey of Consumer Expectations (SCE) Credit Access Survey, and the news is not good.

The Credit Access Survey is a component of the SCE that measures consumers’ expectations and experiences concerning access to credit, such as:

  • The likelihood of applying for a credit card over the next 12 months;
  • The likelihood of rejection of a credit application;
  • The likelihood of rejection of a credit limit increase;
  • The likelihood of rejection of a mortgage or mortgage refinance.

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Access to Credit Builds Consumer Confidence

tight-moneyFast on the heels of the release of the CFPB’s Proposed Rule, which could effectively shut down the small dollar lending market, comes the news that consumers’ spending expectations dropped, after an upswing in September. Perhaps not surprisingly, there was also a decline in consumers’ outlook on credit availability in the year ahead, according to the Federal Reserve Bank of New York.

The New York Fed’s Survey of Consumer Expectations is a monthly, internet-based survey of approximately 1,200 household heads. It contains insight about how consumers expect overall inflation and prices for food, gas, housing, education and medical care to change over time. It also provides Americans’ views about job prospects and earnings growth, as well as their expectations about future spending and access to credit.

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CFPB’s Payday Lending Rule Could Block Consumers’ Access to Small Dollar Loans

We here at CCS understand, perhaps better than most, the important role credit plays in the economy.  Consumer borrowing fuels economic growth. Credit, when used responsibly, allows consumers to spend money on goods and services, which in turn allows businesses to grow and expand, creating jobs and increasing income. So it is good news that consumer borrowing grew at a record pace in August, as reported by ACA International:

“The non-revolving credit increase was the highest since September 2015, Bloomberg reports. Economists estimated total consumer borrowing would increase $16.5 billion in August, according to the article. ‘Steady hiring and income growth may be making Americans more willing to borrow, helping to sustain consumer spending and the economic expansion,’ it states.”

The CFPB released the Proposed Rule in June, which could essentially shut down the small dollar lending market, forcing businesses to close and denying access to credit for millions of Americans who have nowhere else to turn.
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The National Consumer Assistance Plan and Its Impact on Collection Agencies

Filling out a form

CCS has been closely following new policies announced by the three major credit reporting agencies, which are expected to roll out over the next three years.  Equifax, Experian, and TransUnion, have created the National Consumer Assistance Plan in response to cooperative discussions and a subsequent agreement with the Attorneys General of thirty states. The intended effect of this plan is to provide consumers more transparency when interacting with consumer reporting agencies about their credit reports, particularly when there are errors which result in negative information being added to credit reports.
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