, continue to propose misguided solutions to these very real problems. One agency in particular, the Consumer Financial Protection Bureau, seems determined to make things worse for the American consumer.
For example, the CFPB is expected to propose a new rule related to credit reporting — or the lack thereof. This rewrite of the Fair Credit Reporting Act — a law that was passed by and can only be revised by— proposes to eliminate all credit reporting of medical debt. The CFPB is also considering disallowing lenders from taking into account owed medical debt when underwriting loans.
As someone with a background in the financial services industry, I can tell you that operating with incomplete information carries significant negative repercussions. If a, credit union, or other lender does not know that a specific consumer owes medical debt, or if that debt is not reflected in their credit score, they might unwittingly approve a car loan that the consumer genuinely cannot afford. Hiding this medical debt from a credit score does not make it go away.
Compounding this, the CFPB has failed to clearly define “medical debt.” A broad interpretation of this term could include cosmetic procedures charged to credit cards — think Botox — or even minor expenses such as $6 cough drops from CVS. Without precise guidelines from the CFPB, refraining from reporting anything remotely associated with the word “medical” becomes a daunting task.