On September 21, 2023, the CFPB announced it is beginning a rulemaking process to remove medical bills from Americans’ credit reports. The CFPB outlined proposals under consideration that would help families financially recover from medical crises, stop debt collectors from coercing people into paying bills they may not even owe, and ensure that creditors are not relying on data that is often plagued with inaccuracies and mistakes.
According to the CFPB, research showed that medical billing data on a credit report is less predictive of future repayment than reporting on traditional credit obligations. In addition, mistakes and inaccuracies in medical billing are common and can be compounded by problems such as disputes over insurance payments or complex billing practices.
The CFPB’s outline of proposals and alternatives under consideration aims to to do the following:
Remove medical bills from consumers’ credit reports. Consumer reporting companies would be prohibited from including medical debts and collection information on consumer reports that creditors use in making underwriting decisions.
Stop creditors from relying on medical bills for underwriting decisions. The proposal would narrow the 2005 exception and prohibit creditors from using medical collections information when evaluating borrowers’ credit applications.
Stop coercive collection practices. As unpaid medical bills would no longer appear on consumers’ credit reports used by creditors in making underwriting decisions, debt collectors would no longer be able to use the credit reporting system as leverage to pressure consumers into paying questionable debts.
Read the CFPB’s press release here.
The outline of proposals can be found here.
