The federal government’s Consumer Financial Protection Bureau (CFPB) wants to make it illegal for insurers to consider unpaid medical bills in credit reports. That would definitely impact insurer credit scoring.
Currently the bureau is taking feedback from small business that could be impacted if the new rule is ultimately approved. The plan is to have it go into effect sometime next year.
Under the rule, consumer credit companies will no longer be able to include medical debt and collection information for underwriting decisions. Creditors — if the rule is approved — will only be able to look at non-medical information when evaluating for credit.
CFPB Director Rohit Chopra said debt collectors will be under the same rule and will not be able to list medical debt on such reports as leverage to get people to pay bills a consumer finds questionable.
“Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” Chopra said. “When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe.”
He said close to 20% of us say we have medical debt. And some of that debt — Chopra added — is from an error in calculations from a medical facility.
“Families are often barraged with a string of confusing and error-ridden bills, and too many of us have ended up in a doom loop of disputes between insurance companies and health care providers,” he said. “These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report.”
The three largest credit reporting companies are Equifax, Experian and TransUnion. All three agreed they would remove close to 70% of medical debt from their reports if this rule passes.
Source link: CNN — https://bit.ly/3LCfHez
Source link: NPR — https://bit.ly/3EU5uX6
