The American consumers’ credit scores and borrowing power should not be affected by medical debt, according to the federal government’s stance.
On Tuesday, the Consumer Financial Protection Bureau put forward a proposal that would eliminate medical bills from the majority of credit reports. This move aims to enhance privacy protections, boost credit scores, and facilitate loan approvals. Moreover, the proposed rule would prevent debt collectors from exploiting the credit reporting system to force individuals to pay their debts.
As part of its efforts to tackle the burden of medical debt and prevent coercive credit reporting practices, the CFPB has put forward a proposal that would prevent credit reporting companies from sharing medical debts with lenders. Additionally, the proposal would prohibit lenders from using medical information when making lending decisions. This move aims to protect consumers and ensure that their medical information remains private and separate from their creditworthiness.
Criticism of the plan has been leveled by the Association of Credit and Collection Professionals, an industry trade group.
On Tuesday, Scott Purcell, the CEO of ACA, expressed his disagreement with the idea.
In a statement, he expressed his concerns about the impact of the CFPB’s proposal on businesses, health care providers, patients, and consumers. He believes that by concealing information about a consumer’s debt, the proposal will drive up the cost of medical care and result in more upfront payments. He further argues that if the rule is finalized, it will bring about significant changes to the credit-based economy of the United States. The consequences of not paying bills will be reduced, which could lead to limited access to credit and health care for those who need them the most.
According to the CFPB, their perspective differs.
According to CFPB Director Rohit Chopra, the credit reporting system should not be used to force patients into paying medical bills that they don’t actually owe. The practice is senseless and inaccurate, as medical bills on credit reports often have no bearing on the repayment of other loans and can be unreliable. The CFPB aims to put an end to this harmful practice.
The research cited by the agency was conducted in-house.
According to the CFPB, a medical bill listed on a person’s credit report is not an accurate predictor of their ability to repay a loan. The agency’s research indicates that including medical debts in underwriting decisions can actually penalize consumers, resulting in thousands of denied mortgage applications from individuals who would otherwise be able to repay the loan.
According to Dr. Andrew Nigrinis, a former enforcement economist at the CFPB, further research is necessary.
He criticized the CFPB’s proposal, stating that they are proposing to regulate a substantial portion of the healthcare industry’s revenue without taking into account the impact it will have on consumers, industry, health practitioners, and patients.
