By Sabela Ojea
The Consumer Financial Protection Bureau has proposed a new rule that would remove medical bills from most credit reports in a move aimed at protecting consumers' credit scores.
The agency on Tuesday said the proposal would help keep debt collectors from coercing payments for inaccurate or false medical bills, and lead to an improvement in credit scores of about 20 points on average, if the rule is finalized.
The CFPB said that its own research has shown medical bills on credit reports aren't a good predicter of whether a person will repay a loan, leading to thousands of denied applications on mortgages that the consumer would repay.
"Medical bills on credit reports too often are inaccurate and have little to no predictive value when it comes to repaying other loans," CFPB Director Rohit Chopra said.
Around 15 million Americans still have $49 billion in outstanding medical bills in collections appearing in the credit reporting system. The proposal is expected to come with the approval of about 22,000 additional, safe mortgages every year, the agency added.
"The complex nature of medical billing, insurance coverage and reimbursement, and collections means that medical debts that continue to be reported are often inaccurate or inflated," the CFPB added.
The CFPB's latest rulemaking comes about nine months since the agency said it was working on putting an end to what it called "coercive debt collection practices" and limiting the role of medical debt in the credit reporting system.
Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix
(END) Dow Jones Newswires
06-11-24 1456ET
