ICYMI: At Hearing, Warren Blasts Credit Reporting Agency CEOs, Highlights Need for Accurate Data in Credit Reporting
Warren: “Credit reporting agencies are the ones who turn all of that bad data into real pain for American consumers. You're the ones who cost them real money, more than just those bills in every part of their lives.” In Response to Senator Warren, Equifax CEO, Mark Begor said he Would “Certainly Support” Eliminating Medical Debt Data from Credit Reports if Regulators Found It Was Too Error-Prone to Determine Consumers’ Creditworthiness
Washington, D.C. – At a hearing of the Senate Banking, Housing, and Urban Affairs, U.S. Senator Elizabeth Warren (D-Mass.) questioned the CEOs of Equifax, TransUnion, and Experian on the unreliability of medical debt data and its consequences for Americans’ creditworthiness. Senator Warren also pressed the agencies on their willingness to exclude medical debt data from future consumers’ reports, citing research showing that medical collections are less predictive of consumers’ future delinquency rates than nonmedical debt collections. In response to Senator Warren’s questions, Mark Begor, the CEO of Equifax, said he would “certainly support” eliminating medical debt data entirely from credit reports if the Consumer Financial Protection Bureau determined that the data was so error-prone that it should not be used to determine consumers’ creditworthiness.
Transcript: Oversight of the Credit Reporting Agencies
U.S. Senate Committee on Banking, Housing, and Urban Affairs
Thursday, April 27, 2023
Senator Elizabeth Warren: Thank you, Mr. Chairman.
The three of you who are testifying here today are the CEOs of the largest credit reporting bureaus in the nation. Your companies determine the creditworthiness of just about every person in our country. And you make money by collecting and selling information about an individual’s past success in repaying their debts, the amount of money that they owe, and other factors you claim predict the likelihood of repaying debts going forward.
The credit reports that you produce have big consequences for people’s lives. If someone’s credit report drops by, say, 25 points, they could have a rental application turned down, they could be charged a higher price for a car loan, they could pay more for insurance, or they could even miss a chance at a new job.
So it’s really important that the data is right.
Last year, over 100 million Americans had medical debt. CFPB research shows that medical collections are less predictive of consumers’ future delinquency rates than nonmedical debt collections. And research by FICO finds that medical collections that have been paid – this one really gets me – the ones that have been paid are even less predictive of consumers’ creditworthiness than unpaid medical collections.
Mr. Begor, you’re the CEO of Equifax. Do you agree with the research showing that medical debt collections are not as good at predicting the likelihood of default as other kinds of debt, like car loans, mortgages, and the like?
Mark W. Begor, CEO, Equifax Inc.: Medical debt is a very complex topic, Senator. A lot of medical debt isn't taken on willingly by consumers so we appreciate the complexity of the medical debt as a complex –
Senator Warren: That’s not the question I'm asking you. I understand that it's complex. The question I'm asking is its predictive value compared with, say, car loans, mortgages and paying the rent.
Mr. Begor: It still has a predictive value, but, the Senator knows that we took a proactive action to exclude medical debt under $500, as well as exclude –
Senator Warren: I understand what you've already done. I'll ask my question for a third time. Is it less predictive than other forms of paying your bills?
Mr. Begor: It's still a predictive element in paying bills.
Senator Warren: Is it less predictive than other forms of paying your bills?
Mr. Begor: I don't have that information available.
Senator Warren: You don't have that information available? Are you kidding me? You are the head of one of the biggest credit reporting agencies in the country and you don’t know the relative predictability of one of the major forms of debt that you report on? Really? You expect me to believe that?
Mr. Begor: Senator, as I said, we still believe it's predictive. We're continuing to –
Senator Warren: That was not the question. If you can say that it is predictive, then I am shocked that you don't know how predictive it is, compared to other forms of debt collection. The reason that medical debt is a poor predictor of credit worthiness is our medical system is a mess.
Most hospitals charge you one price. They charge insurance companies another, so medical bills are often a moving target. Bills are routinely sent to the wrong party. Often a patient can’t even figure out what it is in terms of supplies or services that they are being billed for.
Studies – which I assume you would have read – show that as much as 80% of medical bills contain errors. The CFPB found that “many medical bills reported on credit reports are disputed, inaccurate and not owed.” Some debt collectors have even stopped reporting medical bills to your companies because the data is so bad that they worry that they may be violating federal consumer protection laws by going after it.
Last year, your companies made changes in how you handle medical debt. Those changes were good, but you fixed roughly about half the problem. Nearly half of the roughly 38 million people with medical debt on their credit reports will be left in the same position as if your companies had done nothing.
The CFPB has said that it will continue to assess whether unpaid medical debt should remain on Americans’ credit reports at all.
Mr. Begor, let me ask you this. If the CFPB were to conclude that data on medical debt is so full of errors that it doesn’t belong on credit reports, would you support all credit reporting agencies removing it entirely?
Mr. Begor: We’re certainly prepared to collaborate with the CFPB –
Senator Warren: That’s not the question I asked you. Do you want me to repeat the question?
Mr. Begor: No, that's not necessary, Senator. We'd certainly support that.
Senator Warren: Alright, thank you. Mr. Cartwright, what about you? If the CFPB concluded that this data was so problematic that it doesn’t belong on credit reports, would TransUnion remove medical collections from consumers’ reports?
Chris A. Cartwright, President and CEO, TransUnion: Senator, we would work with the CFPB –
Senator Warren: That’s not the question I asked. I'm not asking you whether or not you want to work, I'm saying if they conclude that the data is so problematic that it does not belong on credit reports, with TransUnion, remove those data from consumers’ reports?
Mr. Cartwright: Senator, to be clear, the CFPB is our regulator and if they were to direct us to remove the remainder of information, because the actions we’ve taken voluntarily have removed 70% of consumer debt from the record, but if they directed us to do so we, of course would comply.
Senator Warren: Alright, but I asked you a different question. The question I asked you is just a factual one. If they conclude that the data are so bad, that they should not be listed on credit reports – I'm not asking whether or not if they go ahead and put an order in place. If you have that information – Mr. Begor claims not even to know how bad medical debt reporting is – if you have that information from the CFPB, would TransUnion stop reporting it?
Mr. Cartwright: Senator, we are committed to accurate and complete credit reporting.
Senator Warren: So if the federal consumer protection agency said these data are so inaccurate they should not be on credit reports. Would you then remove them from the credit reports? It’s a simple question, Mr. Cartwright. If you have this information from a federal regulator, would you use that information in order to get rid of this data? Take it off the reports?
Mr. Cartwright: We would certainly act appropriately, Senator, in the circumstance –
Senator Warren: I’m asking you. You're the CEO. Is it appropriate then to just take it off?
Mr. Cartwright: I find it difficult to believe that the CFPB wouldn't issue guidance on the matter if that were –
Senator Warren: So you're gonna wait to be ordered. That's what you're saying, you don't do anything unless you're ordered to do it?
Mr. Cartwright: What I'm saying, Senator, is that we are a data driven –
Senator Warren: Mr. Cassin, I’m past my time. Let me turn to you. Would you support removing medical collections from Experian’s credit reports if the CFPB concluded that the data were so problematic, they should not be on credit reports?
Brian Cassin, CEO, Experian: I understand the nuance of your question. I think, first, is obviously if the CFPB Director, says of course, we would comply with that. If the CFPB concluded that it was so problematic, and that the industry also agreed that there wasn't an issue in removing that data from credit reports, then we would do so too. But I think it is a complex issue, Senator and I think it needs to be looked at in the in the in the broad.
Senator Warren: I apologize to the chair for running over. I understand that the credit reporting agencies are just the last link in a very problematic chain of actors. Hospitals, health systems, insurance companies, medical credit card issuers are all profiting from a business model of bogus – and even illegal – health care charges. I’d like to see those CEOs in front of us as well.
But credit reporting agencies are the ones who turn all of that bad data into real pain for American consumers. You're the ones who cost them real money, more than just those bills in every part of their lives.
It’s time to start holding every link in this chain accountable and that includes credit reporting agencies.
Thank you, Mr. Chairman.
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