The Consumer Financial Protection Bureau Tuesday announced a proposed ban of medical bills from credit reports, which could impact the information available to underwriters.
The proposal would prohibit lenders from making decisions based on medical information along with stopping credit reporting agencies from sharing information about medical debt.
“The CFPB is seeking to end the senseless practice of weaponizing the credit reporting system to coerce patients into paying medical bills that they do not owe,” said CFPB Director Rohit Chopra in a press release. “Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans.”
The proposed rule follows the move by Equifax, Experian and TransUnion that they would take many medical bills off credit reports.
According to the CFPB, Americans have more than $49 billion in medical debt in collections.
The rule will allow lenders to consider medical information related to disability income and information relevant to the loan.
The repossession of medical devices will be banned.
The CFPB will receive comments on the proposed rule through Aug. 12, 2024.
