In a noteworthy regulation shift, the Consumer Financial Protection Bureau (CFPB) is reportedly initiating a rulemaking process with the intent to remove medical bill tradelines from consumer reports. This announcement was made on September 21, 2023. The CFPB is not just stopping there. It is also intending to prohibit creditors from relying on medical bills during underwriting processes.
According to a publication by Burr & Forman, the proposal comes amid concerns that medical bills are not a reliable indicator of a consumer’s creditworthiness. This is due to the unique features of medical billing compared to other types of bills. Critics argue that due to these feature, having medical bills in credit reports disproportionately impact some consumers. The proposed new regulations will affect corporations and law firms alike that deal with consumer credit, medical billing, and related practices.
The specifics of the planned regulation changes or the precise timeline for their implementation have not been shared yet. However, given the potential impacts of these changes, legal professionals, especially those in the fields of consumer protection and credit law, ought to keep a close eye on the development.
This matter raises several key questions that the legal community needs to address: Will the exclusion of medical bills from credit reports result in a general shift in credit reporting practices? How will the prohibition of creditors from using medical bills affect lending decisions and practices? The answers to these questions may fundamentally reshape the landscape of consumer credit law.