The Consumer Financial Protection Bureau (CFPB) today announced a Notice of Proposed Rulemaking (NPRM) aimed at addressing the reporting of medical bills on credit reports. This initiative follows the CFPB’s September 2023 announcement to explore options for restricting such reporting practices.
The CFPB’s NPRM highlights the importance of accurate credit reporting that ensures both a safe and sound credit marketplace for consumers and the consumer credit industry that serves them. To achieve this goal, credit reporting should enable creditors to have a comprehensive picture of a prospective borrower’s financial status so that they can evaluate the risk of extending credit and consumers’ ability to repay. This, in turn, protects consumers from facing harmful financial consequences that hinder their future credit capacity and creditworthiness. However, today’s announced NPRM as implemented would not create greater certainty for either creditors or consumers.
At the same time, this NPRM creates unnecessary confusion. On one hand, the notice requires that legally reportable medical debt be removed from credit reports, while on the other hand, the CFPB is taking enforcement action against creditors for not collecting enough financial information from prospective borrowers, such as their monthly expenses for groceries and what they pay out for childcare.
"While we appreciate the Bureau’s effort to use traditional rulemaking in this process," said an industry spokesperson, "rules of the road that send conflicting messages are unhelpful and counterproductive." The spokesperson added that "rulemaking that puts in place clear rules that protect consumers and ensure a safe and sound marketplace with greater access to credit for all consumers would best serve all stakeholders in this process."
June 11th, 2024 by gmcgurn@afsamail.org