U.S. Rep. Patrick McHenry (R-NC) has reached out to the Consumer Financial Protection Bureau (CFPB) over a proposed rule that would restrict the inclusion of medical debt in credit reports and scores.
McHenry is concerned that this proposed rule will undermine underwriting processes and increase risk in the financial system. Further, he believes it will have negative effects on access and affordability of credit for all consumers, particularly for low-income borrowers.
“The FCRA (Fair Credit Reporting Act) requires credit reports to be accurate and complete,” McHenry, chairman of the House Financial Services Committee, wrote in a letter to CFPB Director Rohit Chopra. “The inclusion of medical debt in credit reports meets this requirement. The CFPB does not provide sufficient data in the proposed rule to support its claim that there are more inaccuracies in reporting of medical debt than other types of debt. Furthermore, identification of some inaccuracies in reporting of medical debt, particularly given available dispute processes, does not warrant terminating a creditor’s ability to know the debt level and burden of a potential borrower.”
McHenry added that the CFPB, in its proposal, does not provide evidence that all medical debt information is insufficiently predictive and should not be included on credit reports or in credit underwriting decisions.
“Moreover, the CFPB acknowledges that Credit Reporting Agencies currently only include medical collections on consumers’ reports if they are more than one year past due, are for collection amounts greater than $500, and remain unpaid. As a result, the medical debt information that currently remains on consumer reports can only be unpaid medical debt that the CFPB’s ‘Data Point’ demonstrated to be associated with higher delinquency rates. The CFPB’s failure to provide any further analysis as to how the recognized predictive value of unpaid medical debt is insufficient to allow for inclusion in consumer reports inserts confusion and increases the likelihood of further inaccuracies in underwriting decisions,” McHenry added.
McHenry concluded by asking Chopra to change course on this proposed rule.