The CFPB Tuesday issued a final rule amending Regulation V, which implements the Fair Credit Reporting Act, prohibiting creditors from using medical debt information in credit eligibility determinations and prohibiting consumer reporting agencies from including medical debt in reports to creditors making credit determinations.

The rule:  

• Removes a regulatory exception in Regulation V that previously permitted creditors to obtain or use medical information, including medical debt information, in connection with credit eligibility determinations; 
• Amends existing exceptions for use of medical information related to credit eligibility determinations; and
• Limits the circumstances under which consumer reporting agencies are permitted to furnish medical debt information to creditors in connection with credit eligibility determinations.  

America’s Credit Unions offered feedback on the rule when it was proposed last year, requesting the CFPB issue guidance instead of a rulemaking and noting that credit unions need as complete a picture as possible when making lending decisions as they balance the need to provide credit with maintaining the financial health of all members.

In addition, America’s Credit Unions Vice President of Policy Engagement and Credit Union Operations Ann Petros penned an op-ed explaining the nuances to this issue and how the rule would have a seismic negative impact on borrowers looking to buy a home, start a small business, or pay for higher education.

The final rule is effective 60 days from publication in the Federal Register.