WASHINGTON—The CFPB ‘s proposal to exclude medical debt from credit reports should be issued as guidance instead, according to a letter submitted to the Bureau by America’s Credit Unions.
ACU Senior Regulatory Affairs Counsel James Akin told the CFPB that credit unions and other lenders need as complete a picture as possible when making lending decisions as they balance the need to provide credit with maintaining the financial health of all members.
The trade group added that while many credit unions choose, based on internal policies, underwriting criteria, and risk appetite, to no longer consider medical debt information in credit eligibility decisions—credit unions should have that option.
Policy Basis Lacking
“The Bureau’s proposed rule lacks sufficient policy basis and may have unintended negative consequences for both lenders and consumers. Existing regulations already provide adequate protections for consumers regarding the use of medical debt information in credit evaluations,” Akin wrote, adding that if the CFPB continues with the proposed rulemaking it should do so by requiring medical debt be assigned a lower weight, ensuring it has a reduced impact on creditworthiness decisions.
He added that many current laws and regulations exist to ensure medical debt is appropriately used by creditors, and the CFPB “does not possess a sufficient policy or factual basis for the proposed rulemaking to prohibit creditors and consumer reporting agencies from considering medical debt information” in credit eligibility determinations.
Significantly Impairs Lenders
“This rule would significantly impair lenders’ ability to accurately assess a borrower’s creditworthiness, conflicting with existing regulatory guidance and potentially violating key financial regulations,” Akin concluded.