Medical debt would be scrubbed from consumers’ credit reports under a proposal financial regulators are considering, an effort to aid millions of U.S. households grappling with hefty outstanding bills.it’s starting to fashion a rule that would ban credit-reporting companies from including the debt, while also stopping lenders from considering it when deciding whether to allow a consumer to borrow. The rule would also halt coercive repayment practices, according to a CFPB statement Thursday.
“Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” CFPB Director Rohit Chopra said in the statement.indicating that about 20% of U.S. households reported having it in some form.
The report was the agency’s first in which it publicly considered such debt, and Chopra said at the time the medical billing process in the U.S. often leaves consumers in a “doom loop.” Billing can be chaotic, insurance payouts can be slow and debt collectors may not have sufficient documentation to know if a reported debt is correct, the CFPB found.