CRL and Americans for Financial Reform Education Fund (AFREF) support the proposed rule which amends the Fair Credit Reporting Act Regulation V to prohibit creditors and consumer reporting agencies from using medical debt information for credit eligibility determinations or providing medical debt information that a creditor is prohibited from using. The Fair Credit Reporting Act was enacted, in part, to “improve the accuracy and integrity of consumer reports.” Medical debt is not an accurate predictor of an individual’s ability to repay debts and should not be considered in credit underwriting decisions.
The rule can and should be strengthened to extend the credit reporting prohibition to medical lending products used to pay down medical debts (medical credit cards) and to prohibit the use of medical debt reports for other determinations beyond credit eligibility, including at a minimum employment and tenant screening.
The proposed rule is essential to protect families from the negative impacts of medical debt on their health and their finances. But the rule is especially important to protect Black, Latine, and other people of color who are more likely to have medical debt burdens. These medical debts and their negative consequences are substantially rooted in a historical and ongoing legacy of structural racism in housing, employment, and healthcare policies and practices that contribute to racial economic inequality, racial gaps in health insurance coverage, and inequities in health care access and health conditions. The proposed rule will not remedy these inequities, as it does not address the causes of the wide racial disparities in the prevalence of medical debt. But it is essential to prevent the negative outcomes of medical debt from perpetuating these racial inequities in future financial determinations — the ability to secure credit, apply for a job, or get an apartment.