CFPB Aims to Remove Medical Bills from Credit Reports

CFPB taking action to eliminate reporting of medical debt, protect patients

The Consumer Financial Protection Bureau (CFPB) today announced it is beginning a process that could result in the removal of all medical bills and associated medical debt from consumer credit reports.

“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,” said CFPB Director Rohit Chopra. “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.”

According to a 2022 study, about 20% of Americans have medical debt that shows up on credit reports. However, CFPB research shows this debt has little predictive value when it comes to meeting other credit obligations.

Consumer advocacy groups were quick to applaud the efforts of the CFPB to extend this protection.

“Negative credit reporting is one of the biggest pain points for patients with medical debt,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “When we hear from consumers about medical debt, they often talk about the devastating consequences that bad credit from medical debts has had on their financial lives. A bad credit score doesn’t just affect your ability to get credit, but also your employment prospects, insurance rates, and ability to get rental housing."

Advocates noted that despite voluntary changes by the three major credit bureaus, consumers still face significant negative impacts when medical debt ends up on credit reports. Specifically, the three credit bureaus eliminated the reporting of unpaid medical debts less than $500 and removed paid medical debts. However, CFPB research suggests that more than half of all consumers with medical debt owe more than $500.

“The voluntary changes by the credit bureaus were simply not enough,” said Julia Char Gilbert, Connelly Policy Advocate at Colorado Center on Law and Policy. “Patients with medical debts over $500 are often most vulnerable to the catastrophic harms of damaged credit reports, a key reason that Colorado moved to ban credit reporting of all medical debt. The CFPB's decision to extend these protections to all Americans is a huge win for patients and their families.”

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