A Consumer Financial Protection Bureau proposal to prohibit lenders from considering medical debt from most credit reports “will undermine underwriting processes and increase risk in the financial system, to the detriment of consumers,” the Republican members of the House Financial Services Committee said this week in a joint letter to the bureau.
The CFPB in June issued a proposed rule concerning the use and reporting of medical debt under the Fair Credit Reporting Act, or FCRA. In their letter, the lawmakers said the FCRA requires credit reports to be accurate and complete. The inclusion of medical debt in credit reports meets that requirement, they said.
The lawmakers said the true cost of the proposal would be paid by all consumers. “The proposed rule will result in critical debt information being withheld from creditors as they consider whether to make a loan to a consumer. The proposed rule will ultimately make health care more expensive particularly for those who need it most.”
Earlier this month, ABA raised multiple concerns about the proposal in a letter to the bureau. Among other things, the association said that the proposed rule violates the Administrative Procedure Act because it is not supported by evidence, it does not adequately consider how suppressing information about consumer debts will make lending riskier and credit less accessible, and the CFPB was giving itself authorities that Congress did not intend when lawmakers enacted the FCRA.
