Consumer Financial Protection Bureau finalizes rule banning medical bills from credit reports and prohibiting lenders from using medical information

The Consumer Financial Protection Bureau (CFPB) issued a final rule amending Regulation V under the Fair Credit Reporting Act to remove medical bills from credit reports used by lenders and to prohibit lenders from using medical information in credit decisions. The CFPB estimates the rule will remove about USD 49 billion in medical bills from the credit reports of roughly 15 million Americans. The rule ends a regulatory exception that had allowed creditors to consider certain medical information, which the CFPB said enabled debt collectors to use credit reporting as leverage to collect disputed or invalid bills. Consumer reporting agencies are prohibited from including medical debt information on credit reports and credit scores sent to lenders, and creditors are barred from considering medical information, including information about medical devices that could otherwise be used as collateral for repossession. The rule preserves certain specified uses, including verifying medical-based forbearances, verifying medical expenses a consumer needs a loan to pay, and considering certain benefits as income when underwriting. The CFPB expects the rule to contribute to the approval of about 22,000 additional affordable mortgages each year and that affected consumers could see an average credit score increase of 20 points. The rule takes effect 60 days after publication in the Federal Register.