Magaziner and Gluesenkamp Perez Urge Consumer Financial Protection Bureau to Remove Medical Debt from Credit Reports

Washington, D.C. — Today, Representative Seth Magaziner (RI-02) and Representative Marie Gluesenkamp Perez (WA-03) led 57 Members of Congress in a letter urging the Consumer Financial Protection Bureau (CFPB) to move swiftly to prevent creditors from using information about Americans’ medical debt to determine credit worthiness.

Medical debt is not a reliable predictor of overall financial well-being, and unfair debt collection and coercive credit reporting practices have put a financial strain on millions of Americans. A diminished credit score caused by medical debt could make it more difficult for working people to get a job, buy a house or car, or start a small business.

“A medical emergency should not destroy your credit and financial future, but for millions of Americans with medical debt from unexpected health care costs, this is the reality,” said Rep. Magaziner. “We must end unfair debt reporting practices to provide some much-needed breathing room for working people saddled with medical debt in Rhode Island and across the country.”

“People don’t have control over falling ill or becoming injured, so their credit score shouldn’t be tanked for having to take on medical debt. Experiencing a health crisis isn’t an informative measure of financial well-being, nevertheless the resulting credit impacts put folks’ financial futures at risk,” said Rep. Gluesenkamp Perez. “CFPB’s proposed rule to end unfair debt reporting practices would make life easier for families in Southwest Washington who might already be facing the immense strain of a medical emergency.”

The signatories of the letter include Representatives Seth Magaziner, Marie Gluesenkamp Perez, Alma Adams, Jake Auchincloss, Becca Balint, Nanette Barragán, Suzanne Bonamici, Yadira Caraveo, Tony Cárdenas, André Carson, Troy Carter, Greg Casar, Kathy Castor, Sheila Cherfilus-McCormick, Jim Costa, Danny Davis, Mark DeSaulnier, Dwight Evans, Jesús García, Sylvia Garcia, Jared Golden, Daniel Goldman, Vicente Gonzalez, Al Green, Raúl Grijalva, Jonathan Jackson, Pramila Jayapal, Marcy Kaptur, Raja Krishnamoorthi, Barbara Lee, Susie Lee, Zoe Lofgren, Kevin Mullin, Jerrold Nadler, Eleanor Norton, Ilhan Omar, Jimmy Panetta, Donald Payne, Chellie Pingree, Mark Pocan, Katie Porter, Ayanna Pressley, Delia Ramirez, Andrea Salinas, Mary Scanlon, Janice Schakowsky, Adam Schiff, Abigail Spanberger, Shri Thanedar, Rashida Tlaib, Ritchie Torres, David Trone, Juan Vargas, Bonnie Watson Coleman, Susan Wild, Nikema Williams and Frederica Wilson.

A PDF of the letter can be found HERE and the full text of the letter is below:

Dear Director Chopra,

We are writing to express strong support for the Consumer Financial Protection Bureau’s (CFPB) proposed rulemaking to end unfair medical debt collection and coercive credit reporting practices that put a strain on American families. Specifically, we support the CFPB’s proposals to remove medical bills from consumers’ credit reports and prevent creditors from using medical bills to make determinations about credit eligibility. Medical emergencies are not a reliable predictor of overall financial well-being and should not hold Americans back from accessing financial opportunities.   

While medical debt currently impacts people’s credit like other debt, people do not have control over whether they are forced to take on medical debt. In fact, two thirds of medical debt is the result of a one-time or short-term medical expense arising from an acute medical need. When people are ill,  they usually don’t have the ability to shop around for best prices when obtaining medical services and have to navigate medical services that often lack pricing transparency. This is particularly true in the case of emergency care, but applies even to scheduled procedures because consumers are rarely told the costs of medical services in advance. The billing and payment process for medical debts is often opaque because of the complex interactions between providers, consumers, and third-party insurers.

Medical debt is not an accurate predictor of a person’s credit worthiness and should not impact their ability to access credit and build for the future.  A low credit score or the presence of collections on a person’s credit report can jeopardize their ability to take out a loan or credit card, and those that can access credit often face higher interest rates. This may make it hard for people with medical debt to buy a house or car, take out loans to send their kids to college, or start a small business. Medical debt should not be used to prevent people from renting an apartment, turning on their water, electricity, gas or heat, or buying car or homeowners insurance. Medical debt should not imperil someone’s ability to get a job, as employers often pull consumer credit reports before deciding who to hire or promote. The presence of medical debts on credit reports can put an individual’s financial wellbeing and future at risk, ultimately punishing people unfairly for getting sick or injured.

We appreciate the CFPB’s attention to this crucial issue and urge the CFPB to move swiftly to prevent creditors from using medical debt collection information to make determinations about consumers’ credit eligibility and to prevent consumer reporting agencies from including medical debt collection tradlines on consumer credit reports.