100+ Groups Support the CFPB’s Removal of Medical Debt From Credit Reports

August 12, 2024 — Press Release

WASHINGTON – Today, over 100 consumer, civil rights, military, legal services, and community groups submitted comments in strong support of the Consumer Financial Protection Bureau’s (CFPB) proposed rule to ban medical debt from credit reports. 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.

“The CFPB’s proposed rule would improve the lives of 15 million Americans by eliminating the unfair scourge of medical debt from their credit records,” said Chi Chi Wu, senior attorney at National Consumer Law Center. “It would be a huge victory for consumers. We strongly support the proposal and urge the CFPB to finalize it.”

The National Consumer Law Center also submitted a longer, more detailed set of comments. 

While the big three credit reporting agencies (Equifax, Transunion, Experian) voluntarily removed some medical collections information starting in 2022, following attention to the problem from the CFPB, a 2024 CFPB study revealed that 15 million Americans still did not benefit from these industry-initiated efforts, likely due to their medical collections amounts exceeding the $500 threshold set by the industry.

Many of the left-behind individuals came from the Southern states, Black and Latino neighborhoods, or were lower-income individuals. For these populations, the negative impacts of leaving medical collections on credit reports continued, as well as the substantial burdens of medical debt, its inaccuracies when included in consumer credit reports, and the sometimes abusive collection tactics on disputed medical bills. Eliminating medical collections data from all credit reports will help curb the potentially abusive collection practices and negative impacts that have resulted from medical collection information being left on credit reports.

“This proposal will make credit reporting fairer and more accurate for consumers, particularly lower-income individuals and people of color, who — due to decades of systemic racism, redlining, and occupational segregation has driven racial health inequities and undermined access to affordable, quality health care — are more likely to be left with large medical debts on their credit reports, limiting their ability to access affordable credit,” said Christine Zinner, senior policy counsel at Americans for Financial Reform Education Fund.

The CFPB’s proposal would close a loophole that has kept vast amounts of medical debt information in the credit reporting system. This 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.