The Consumer Financial Protection Bureau (CFPB) finalized a rule that will remove medical bills from the credit reports.
The CFPB’s new rule amends Regulation V, which implements the Fair Credit Reporting Act (FCRA), to stop from including medical bills on credit reports sent to lenders. The CFPB estimated $49 billion in medical bills will be excluded from credit reports, adding that medical debts “provide little predictive value to lenders about borrowers’ ability to repay other debts.”
The CFPB added the rule follows changes made by the three major nationwide credit reporting agencies – Equifax, Experian, and TransUnion – after they announced they would take certain types of medical debt off of credit reports, including collections under $500, while FICO and VantageScore, the two major credit scoring companies, announced they have decreased the degree to which medical bills impact a consumer’s score.
“People who get sick shouldn’t have their financial future upended,” said CFPB Director Rohit Chopra. “The CFPB’s final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe.”
The rule will be effective 60 days after publication in the Federal Register.
Photo courtesy of Cinema Crazed
