In response to a Biden administration request, the Consumer Financial Protection Bureau presented its draft rules for removing medical bills from credit reports.
The CFPB discovered that medical bills accounted for 58% of third-party debt collection on consumer credit reports.
Since July 2022, medical debt under $500 is no longer reported. New rules aim to make this change mandatory for all medical debt.
The agency aims to prevent creditors from using medical bills in underwriting decisions, prioritizing non-medical data for loan applications.
1 in 5 Americans carry medical debt on their credit reports, potentially limiting housing, loan, and credit card choices.
A study by the Medical Billing Advocates of America suggests that as many as 80% of medical bills contain errors.
The director of the CFPB Rohit Chopra said, “millions of people have spent millions of hours disputing these errors, often while dealing with serious illness.”
The rulemaking process is time-consuming, and CFPB officials anticipate releasing an official rule sometime next year.
Scott Purcell, CEO of debt collection group ACA International, expressed concerns about singling out medical providers in billing compared to other industries.