Contrary to claims in the recent BankThink article by Shaun Ertischek ("
Reforming the broken system of reporting medical debt would help consumers and responsible lenders, alike. America's health care system saddles consumers with billions of dollars in medical debt — debt that mars the credit reports of millions of consumers. Medical debt shuts consumers out of affordable car loans, credit cards and mortgages, or costs them thousands more.
Worse yet, it can deny access to jobs (nearly 50% of employers use credit reports for all or some jobs) or even a roof over their heads (90% of landlords use credit reports).
Debt collectors, such as that op-ed's author, are the industry group that stands to lose the most with a ban on medical debts on credit reports. It's not health care providers; in fact, the American Hospital Association submitted a comment letter to the CFPB that its patient billing guidelines "encourag[e] hospitals to forego adverse credit reporting of medical debt" and that the "guidelines, therefore, largely align with the CFPB's proposals …"
Banks and lenders are not the ones to lose from a ban on medical debts on credit reports. In fact, the financial services industry could benefit from a ban as more consumers become eligible for mainstream credit. Removing medical debts from credit reports benefits consumers tremendously. The CFPB's research found that consumers experience a 25-point increase in their credit score after the last medical debt is removed from their credit report, and that they have access to thousands more in available credit afterwards.
Banning medical debts from credit reports will allow consumers to access credit more affordably, qualify for more employment opportunities, and obtain housing in high opportunity areas. The rule is a win-win for consumers and responsible lenders.
