CFPB proposed rule would ban medical debt from credit reports 

CFPB Building

The CFPB is proposing a new rule to remove medical bills from most credit reports, stop credit reporting companies from sharing medical debts with lenders, and prohibit lenders from making lending decisions based on medical information. The rule, introduced Tuesday, comes as part of the bureau’s efforts to address the burden of medical debt and coercive reporting practices.  

Specifically, the proposed rule would: 

  • Eliminate the special medical debt exception that broadly permits lenders to obtain and use information about medical debt to make credit eligibility determinations; 
  • Establish guardrails for credit reporting companies; and 
  • Ban repossession of medical devices. 

In March of 2022, the CFPB issued a report estimating that medical bills made up $88 billion of the reported debts on credit reports. The report also announced plans to further research and assess whether credit reports should include data on unpaid medical bills.

The bureau’s rulemaking process began September of 2023 with an outline of proposals under consideration related to the Fair Credit Reporting Act (FCRA). America’s Credit Unions’ legacy organizations responded to the proposals, requesting that credit unions be permitted to continue using medical debt information as they see fit because this data offers an important means of confirming ability to repay.

Comments on the proposed rule are due to the CFPB Aug. 12; America’s Credit Unions is reviewing the proposal to provide analysis for member credit unions. 

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