In What May Be Only a Temporary Move, the Consumer Financial Protection Bureau Removes Medical Bills from Credit Reports

In a move alarming part of the national banking industry, the Consumer Financial Protection Bureau has issued a new rule prohibiting leaders from including medical bills on credit reports.

In a public letter, Seth Frotman, general counsel for the CFPB, remarked that “consumers often incur medical bills through unexpected emergencies.” He noted that roughly 66% of consumers with medical debts surveyed by the CFPB said those debts were the result of a “one-time or short-term expense arising from an acute medical need.”

In a separate communication with several states, the CFPB said it is not only banning the inclusion of medical bills on credit reports but also prohibiting lenders from “using medical information in their lending decisions.”

The CFPB ruling has been a long time coming, with the American Banking Association asserting that the action could increase credit risk and reduce credit availability for consumers.

In a statement, the ABA added that excluding medical debt information in credit underwriting could have the unanticipated consequence of “triggering tighter credit standards, higher prices, and reduced lending, and ultimately reducing access to consumer credit.” 

Analysts have suggested that the CFPB medical bill ruling may eventually be overturned, but not until President Trump has replaced Rohit Chopra, the director of the agency. Chopra was appointed to his post by President Biden in 2021.

The CFPB director has indicated to reporters that he thinks it is only a matter of time until Trump asks him to step down. “I swore an oath to a five year-term,” Chopra remarked this week to the New York Times, “and I will keep serving that until I can pass the baton onto someone else.”

In a statement released last week, Westin Lloyd, spokesperson for the Consumer Bankers Association, said the longer Chopra stays in his current position, the more difficult it will be for the Trump administration to undo his “government price-setting agenda.”

January 31, 2025

By Garry Boulard

Photo courtesy of Consumer Financial Protection Agency

No Responses

Your comment will be posted after it is approved.

Leave a Reply

Get stories like these right to your inbox. ​Sign up for our newsletter
Archives
Construction Reporter

Show Password Forgot Password?