News Release: Removal of Medical Debt From Credit Reports Will Curb Abuses


June 11, 2024

Carter Dougherty

Removal of Medical Debt From Credit Reports Will Curb Abuses

The proposal by the Consumer Financial Protection Bureau to eliminate medical debt on credit reports would, if fully implemented, curb harmful practices such as distorted credit reports and abusive debt collection.

“Medical debts are not a good predictor of general credit worthiness, they are often inaccurate, and their inclusion on credit reports effectively punishes people for health problems and lack of wealth and adequate insurance. Medical debts on credit reports can also be a tool in abusive collection practices around disputed debts. Stopping their inclusion in credit reports will strengthen the accuracy and fairness of the entire credit reporting system and help low and moderate income people and residents of Southern states in particular,” said Christine Zinner, senior policy counsel with the Americans for Financial Reform Education Fund. “Years of systemic inequities baked into the credit reporting system have disproportionately limited access to capital for individuals of color and today’s proposal would help level the playing field for them as well.”

As part of a broader initiative to improve the credit reporting system, the CFPB has proposed a new rule  that would stop credit reporting agencies from including medical debts and collection information on consumer credit reports, and prohibit the information from being  considered in underwriting decisions. The CFPB is now seeking public comment on this consumer protection proposal.

While the big three credit reporting agencies (Equifax, Transunion, Experian) voluntarily removed some medical collections information starting in 2022, following attention to the problem from the CFPB, a 2024 CFPB study revealed that 15 million Americans still did not benefit from these industry-initiated efforts, likely due to their medical collections amounts exceeding the $500 threshold set by the industry.

Many of the left-behind individuals came mostly from the Southern states, or were lower-income individuals. For these populations, the negative impacts of leaving medical collections on credit reports continued, as well as the substantial burdens of medical debt, its inaccuracies when included in consumer credit reports, and the sometimes abusive collection tactics on disputed medical bills. Eliminating medical collections data from all credit reports will help curb the potentially abusive collection practices and negative impacts that have resulted from medical collection information being left on credit reports.