The Consumer Financial Protection Bureau (CFPB) has recently made notable changes in the way medical debt is reported on credit reports. These new rules will help minimize the impact of outdated or erroneous medical billing on consumers’ credit scores.
Medical debt can disproportionately affect consumer credit scores, as it is one of the most common contributors to unpaid bills. By extending the timeline to 180 days for debt removal, the CFPB hopes to reduce the number of inaccurate or outdated medical debts that may unfairly damage consumers’ credit ratings.
The new rules apply to credit reporting agencies, who will now have to wait 180 days before reporting unpaid medical debts on credit reports. Additionally, debts that have been removed from credit reports due to debts being paid or erased would not be re-reported as unpaid debts. This change aims to acknowledge the role of complex medical billing processes and instead focus on bona fide debts that meet certain criteria.
Furthermore, the guidance also encourages credit reporting agencies to use other factors to determine a consumer’s creditworthiness beyond outstanding medical debts. This could help ensure a more equitable assessment of individuals’ overall financial responsibility, not just their ability to pay off medical expenses.
