CFPB Director Rohit Chopra’s opening remarks at the bureau’s Consumer Advisory Board meeting focus on next steps in medical debt and credit reporting regulation, in particular the plans of Experian, TransUnion and Equifax to change processes for reporting medical debts.
04/07/2022 2:00 P.M.
2.5 minute read
Consumer Financial Protection Bureau Director Rohit Chopra spoke at the Consumer Advisory Board’s March meeting this week, which included a discussion on medical debt, credit reporting, and digital currencies, among other topics.
Chopra focused on medical debt and credit reporting and the recent credit reporting changes announced by Experian, Equifax and TransUnion, in his opening remarks.
“Good afternoon. In modern consumer financial markets, financial institutions rely on more and more data every day. Today, I want to specifically focus on the issues associated with the furnishing of allegedly unpaid medical bills on consumer credit reports. I also want to share some of the CFPB’s early thinking on the recent announcement by Equifax, Experian, and TransUnion, regarding their reporting of medical bills.”
The CFPB released a report about the U.S. medical billing system and the credit reporting infrastructure connected to medical debt in March 2022, which Chopra said, “built on work the CFPB has been doing since its inception, including a critical report we issued in 2014. The 2014 report found both that including medical bills on credit reports excessively penalized an individual’s credit score and that including medical bills on credit reports reduced the predictive value of an individual’s credit score. That is, including medical bills in credit reports hurt both individuals seeking credit and financial institutions trying to assess the risk that any given person would default on a loan.”
He noted that less than 21 days after the report was published, Equifax, Experian, and TransUnion announced they were changing how medical bills would be reported on credit reports and that “one aspect that was particularly eyebrow-raising. The firms appeared to have made an agreement to decide how they wanted to report medical debt. This raised a key question: are these three firms acting as competitors or as a cartel?”
The time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, according to a press release from the credit reporting agencies (CRAs), “giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.”
Effective March 30, 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports, according to a summary of the changes from the CRAs.
“Important decisions about credit reporting should not be left up to three firms that arbitrarily decide how reporting will impact consumers’ access to credit,” Chopra said in his remarks, which can be read here.
Related Content from ACA International:
CFPB Explores Medical Debt Research Options at Consumer Advisory Board Meeting
If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.