About 15 million consumers have medical debt on their credit reports. It is controversial whether such bills should be included on credit reports because the medical debt is often unplanned, unavoidable, and unaffordable. Study after study finds that medical debts have little to no predictive value as to whether a consumer will repay a debt. In many cases, the consumer may not even owe the debt or the amount may be inaccurate; medical billing is particularly problematic given the complex interface with insurance.
State legislatures have responded to this criticism by adopting laws to ban or restrict medical debt on credit reports. In addition, the Big Three credit bureaus (Equifax, Experian, and TransUnion) have taken voluntary actions to eliminate some medical debt. The credit bureaus are officially known under the Fair Credit Reporting Act (FCRA) as the nationwide consumer reporting agencies (CRAs). The Consumer Financial Protection Bureau (CFPB) attempted to ban medical debt from credit reports by rulemaking, but a federal district court in Texas struck down the rule.
This article brings readers up to date on the latest developments on all of these fronts. It also discusses the critical question of whether the FCRA preempts state laws restricting medical debt on credit reports
Support NCLC
Please support NCLC's work to advance consumer rights and economic justice with a tax-deductible contribution today!
Donate