Focused on what auto finance underwriters might see daily, the Consumer Financial Protection Bureau (CFPB) released a report this week examining trends in credit reporting of debt in collections from 2018 to 2022.

While focused on other parts of the credit market, the report showed the total number of collections tradelines on credit reports declined by 33%, from 261 million tradelines in 2018 to 175 million tradelines in 2022.

The CFPB said the share of consumers with a collection tradeline on their credit report decreased by 20% in the same timeframe.

The bureau reiterated collections tradelines are furnished to credit reporting companies by third-party debt collectors. Commonly reported collection items include medical, rental and leasing, credit card, and utility accounts.

Officials noted some third-party collectors work on behalf of original creditors for a fee (contingency-fee-based debt collectors) and others purchase accounts outright from creditors (debt buyers).

Unlike most other tradelines, the CFPB said debt collection tradelines “rarely report positive information” such as on-time payments, resulting in reporting of collections tradelines being “almost entirely harmful to consumers.”

The bureau pointed out collections tradelines are visible to potential finance companies, lenders, employers, landlords, and others who run credit inquiries or background checks.

“Collections tradelines can limit people’s access to jobs and housing, as well as decrease credit scores and increase the cost of credit. Given the potential damaging impacts of collections tradelines, reporting of inaccurate data is especially harmful,” the CFPB said in a news release.

The report is drawn from the CFPB’s Consumer Credit Panel, a nationally representative sample of approximately 5 million de-identified credit records maintained by one of the three nationwide credit reporting companies.

“Our analysis of credit reports provides yet another indicator that, due to a strong labor market and emergency programs during the pandemic, household financial distress reduced over the last two years,” CFPB director Rohit Chopra said in the news release. “However, false and inaccurate medical debt on credit reports continues to be a drag on household financial health.”

The entire report can be downloaded via this website.