Incidence and Types of Collection Tradelines on Credit Reports

Many consumers don’t even know what a “collection tradeline” is, but the reality is that collection tradelines may impact your life daily. A “collection tradeline” is the term for when a creditor or collection agency report of a delinquent debt appears on your credit report. Having a collections tradeline on your report influences your credit score—which in turn impacts the amount you’ll pay for loans, your ability to get credit cards and loans, and more. In some cases, it can even affect your ability to get a job.

According to a report by the Consumer Financial Protection Bureau (CFPB), 220 million consumers have credit files maintained by the three largest credit bureaus, Experian, Equifax, and Trans Union. Of those consumers, one-third have collection tradelines included in their credit files. And the majority of them have more than one collection tradeline on their report. The median consumer has 4.5 of them in their file.

Looking at credit reports, the CFPB concluded that most collection tradelines relate to fairly small debts. The median amount owed is just $271—an amount that’s large when you can’t pay it but not so large that it should damage someone’s credit for years, which can happen.

Additionally, the CFPB revealed that medical debt is the most common type of debt included in a collections tradeline. More than half of all collection tradelines are medical debt. And those with medical debt seem to be qualitatively different than those with other types of collections tradelines. For example, the medical debtor has fewer collection items, and, on average, they owe $579. By contrast, someone with a car-related debt usually owes almost ten times as much ($5,587).

In light of the disparity in medical debt reporting, the credit bureaus recently announced that they’d be revising their inclusion of medical debt in future reports.

The lesson here is that it’s essential to monitor your credit file for anything that can harm your credit—from collections harassment to mixed files or identity theft.

If you have problems with your credit report, don’t wait. Contact an attorney who specializes in representing clients like you—a lawyer who can help you repair your record and obtain compensation for any damages you sustained.