GREENSBORO, N.C. — The Consumer Financial Protection Bureau wants to hear from you. The agency is proposing a measure to ban medical bills from being on your credit report. If that happens, the CFPB believes the credit scores of 15 million Americans could rise by 20 points.
According to the CFPB, the proposal would stop credit reporting companies from sharing medical debts with lenders and prohibit lenders from making lending decisions based on medical information. The proposed rule is part of the CFPB’s efforts to address the burden of medical debt and coercive credit reporting practices.
In 2003, Congress restricted lenders from obtaining or using medical information, including information about debts, through the Fair and Accurate Credit Transactions Act. However, federal agencies subsequently issued a special regulatory exception to allow creditors to use medical debts in their credit decisions.
The CFPB is proposing to close the regulatory loophole that has kept vast amounts of medical debt information in the credit reporting system. The proposed rule would help ensure that medical information does not unjustly damage credit scores, and would help keep debt collectors from coercing payments for inaccurate or false medical bills.
The proposal would allow lenders to consider medical information related to disability income, but the medical debt wouldn't be seen.
The CFPB also believes more mortgages would be approved if the report didn't list medical debt.
Opponents of this say this could lead to people simply not paying their medical bills, especially if a debt collector cannot say the unpaid debt will wind up on their credit report.
You can read the entire proposal here and then make your comments here. Just hit the green button on the right that says SUBMIT COMMENT. Comments are being taken until August 12.