FACTA - Medical Collections & Credit Decision

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Question:

During a recent FDIC exam, we were advised it would be a violation to use medical collections as a negative basis for a credit decision since that constituted "use of medical information." I reviewed the FACTA and commentary from the FTC which does not seem to support the statement from the examiner. As a general rule we would not view a few small medical collections as significant credit issues. However, if there are many unpaid medical collections or they are large amounts, it could negatively affect a credit decision in the same manner as any other non-medical collection would. It is hard for us to accept that evaluating an unpaid medical collection constitutes "use of medical information." What is your opinion?

Answer:

You can use medical debts and income information just like you would anything else. You can verify medical payments, medical income, consider late and unpaid medical bills. I disagree with the examiner's comment. Refer to Section 334.30(d)(1) of the FDIC regulation [or Section 222.30(d)(1) of FRB Regulation V].

First published on BankersOnline.com 3/23/09