This report explores reporting of telecommunications-debt collections (telecom collections) to nationwide consumer reporting agencies. It documents the prevalence and dollar value of telecom collections and, in doing so, illustrates industry practices in collection and reporting of telecommunications debts.
Key findings include:
About 22 percent of consumer reports contained a telecom-related item at some point between mid-2013 and early 2018. Although consumers often pay for their telecom services on a monthly basis, most telecommunications providers do not report to credit reporting agencies unless an account is in collections. Nearly 95 percent of the telecom-related items were telecom collections items.
The median telecom collection balance is $408, and 17 percent of telecom collection balances exceed $1,000.
Telecommunications providers often hire collection agencies or sell telecom debt to debt buyers. Collection agencies are typically contracted to collect a telecom debt for several months. After the collection contract ends, the debt is returned to the telecommunications provider and the collection item is removed from the credit record. The debt may be sold or sent again to a collector and reported as a new item in the credit file.
The presence of a telecom collections item on a consumer’s credit record is associated with having a lower credit score, but the change in score before and after the item appears on the credit record is often small and therefore unlikely to affect creditors’ decisions for many consumers.
The data used in this report are from the Bureau’s Consumer Credit Panel, a longitudinal, nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting companies.