Consumer Financial Protection Bureau pitches rule to ban medical debt on credit reports

The Consumer Financial Protection Bureau issued a proposed rule that it said would eliminate as much as $49 billion of medical debts that "unjustly lowers credit scores for 15 million Americans."

The CFPB said in a June 11 news release that, if finalized, its proposal would: 

1. Eliminate the special medical debt exemption that broadly permits lenders to obtain and use information about medical debt to make credit eligibility determinations. Lenders would continue to be able to consider medical information related to disability income and similar benefits, as well as medical information relevant to the purpose of the loan, "so long as certain conditions are met."

2. Prohibit credit reporting companies from  including medical debt on credit reports sent to creditors when creditors are prohibited from considering it.

3. Bar lenders from taking medical devices as collateral for a loan. Lenders would also be banned from repossessing medical devices, like wheelchairs or prosthetic limbs, if people are unable to repay the loan. 

Read the full release here

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