CFPB proposes to ban medical bills from credit reports

On June 11, the CFPB announced a proposed rule [published in the Federal Register at 89 FR 51682 on 6/18/2024] that would remove medical bills from most credit reports, increase privacy protections, help to increase credit scores and loan approvals, and prevent debt collectors from using the credit reporting system to coerce people to pay. 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.

Specifically, the proposed rule, if finalized would:

• Eliminate the special medical debt exception
• Establish guardrails for credit reporting companies
• Ban repossession of medical devices

Comments on the CFPB's proposal will be accepted through August 12, 2024. The CFPB proposes to make the final rule, when issued, effective 60 days after it is published in the Federal Register.

• Unofficial redline of the proposed rule amendments to Regulation V
• Fast Facts on the proposal