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New CFPB Rule: How Unpaid Medical Bills Could Vanish from Credit Reports

— November 13, 2023

The CFPB’s initiative to detach medical debt from credit reports is a promising step toward financial fairness.

Unpaid medical bills are a significant concern for many, often impacting credit scores negatively. A new Consumer Financial Protection Bureau (CFPB) rule suggests a potential relief. The impending regulations may prohibit the reflection of medical debts on credit reports, allowing people to maintain better credit scores.

Medical debts can cause substantial barriers, limiting individuals’ access to loans, housing, and even employment opportunities, as these are areas where credit history is frequently reviewed. The proposed changes aim to provide flexibility, enabling individuals to manage their medical debts more effectively and reduce the stress associated with aggressive debt collection practices.

Maintaining a healthy credit history is crucial. It influences credit scores and determines eligibility for various services, such as mobile plans. The CFPB is actively exploring options to support families recovering from medical emergencies, preventing debt collectors from enforcing payments on inaccurate bills, and ensuring that credit reports are error-free.

Through this initiative, the CFPB aims to enhance the accuracy and fairness of credit reports, making it easier for individuals to access essential services and opportunities without being unjustly penalized by medical debts.

The Impact of Medical Debt on Americans

Medical debt significantly burdens Americans, with research in 2022 revealing that about 20% faced medical debt. According to the Consumer Financial Protection Bureau (CFPB), the medical billing information on credit reports is relatively inconsequential in credit assessments compared to conventional credit obligations, necessitating enhanced accuracy and clarity, especially considering the prevalent disputes regarding insurance payments and intricate billing procedures.

The CFPB’s Anticipated Revisions

The CFPB is orchestrating crucial changes to lessen medical debt’s financial pressure on many Americans. The anticipated modifications include:

1. Omission of Medical Bills from Credit Reports: The upcoming rules could prevent consumer reporting agencies from displaying medical debts and related collection activities on credit reports, influencing consumers’ ability to access loans and various financial services.

2. Limitation on Creditors Utilizing Medical Bills: The proposal will revise the 2005 provision, allowing creditors to use medical collection information in credit evaluations. New rules would limit creditors from relying on medical debt information for making credit decisions.

3. Cessation of Harsh Collection Practices: As medical debts might not appear on credit reports used for underwriting decisions, debt collectors could lose leverage, hindering them from forcing consumers to pay disputed debts protecting consumers from unfair and aggressive debt collection strategies.

The Anticipated Effects on Consumers

The proposed modifications by the Consumer Financial Protection Bureau (CFPB) could be transformative for individuals grappling with medical debt, having various potential implications:

1. Relief from Credit Report Blemishes: Eliminating medical debt from credit reports could offer relief and foster more equitable access to essential financial services like loans. This adjustment could mitigate stress for individuals overwhelmed by medical debts, allowing them to concentrate more on their well-being and less on continuous financial difficulties.

2. Reevaluation of the Impact of Medical Debt: A  2022 study revealed that nearly one-fifth of Americans had medical financial responsibilities. However, the CFPB has discovered that medical billing information on credit reports is less predictive of future repayment habits than traditional credit obligations.

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Photo by Andrea Piacquadio from Pexels

The frequent occurrence of mistakes and discrepancies in medical billing, often amplified by disputes related to insurance compensations and intricate billing practices, highlights the urgency of reassessment.

3. Review of the Fair Credit Reporting Act (FCRA): The FCRA regulates the extent of medical information incorporated in credit decisions and reports. In 2005, a group of financial regulators established an exemption approved by the FCRA, allowing the use of medical data in credit assessments, provided it was also categorized as “financial information.”

Proposed Regulatory Adjustments

The forthcoming regulatory modifications signify essential strategic shifts in handling medical debts, as proposed by the regulators. Here’s a concise overview of the key regulatory adjustments being considered:

1. Exclusion of Medical Debt from Credit Reports: Consumer reporting agencies may be barred from including medical debt and related collection activities in reports utilized by creditors for underwriting decisions. This move aims at eliminating medical debts from individuals’ credit histories.

2. Limitation on Creditors: This strategy revokes the 2005 exemption, preventing creditors from considering borrowers’ medical collection information during credit eligibility assessments.

3. Discouragement of Aggressive Collection Practices: The omission of unpaid medical bills from credit reports will likely diminish debt collectors’ ability to pressure consumers to settle questionable debts, thus inhibiting severe collection practices.

4. Maintained Access for Authorized Purposes: Despite these adjustments, creditors would retain the access to acquire medical bill information for valid reasons, such as assessing the necessity for medical forbearances or evaluating loan applications intended for medical services.

Public Engagement and Future Steps

1. Public Comments and Hearings: An opportunity for public engagement has been initiated through a comment period and a hearing held in July 2023. These platforms are designed to accumulate nationwide insights concerning the negative impacts of erroneous medical billing and aggressive credit reporting approaches.

2. Empowerment of Consumers: The Consumer Financial Protection Bureau (CFPB) is determined to enhance the consumers’ command over their financial information and its application by various businesses. The recent announcements, including the one related to data brokers in August, are integral to the CFPB’s regulatory actions according to the Fair Credit Reporting Act (FCRA).

3. Direction of the CFPB’s Initiative: The endeavor by the CFPB to eliminate medical debt from credit reports signifies a monumental step towards cultivating a more equitable and accessible financial infrastructure for a broader spectrum of Americans. Upon implementation, this initiative is expected to emancipate numerous individuals and households from the rigorous grip of medical debt, facilitating their transition towards more financially secure and healthier lives.


The CFPB’s initiative to detach medical debt from credit reports is a promising step toward financial fairness. By addressing the systemic issue of medical debt and its impact on creditworthiness, this proposal could unlock a more secure financial future for many Americans. Through public engagement and regulatory amendments, the CFPB sets a progressive precedent, aiming to foster a more empathetic and equitable financial ecosystem.

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