Two trade associations have filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) over a recent rule that prohibits medical debt reporting in credit reports.
On Jan. 7, the federal agency finalized a rule seeking to “ban the inclusion of medical bills on credit reports used by lenders and prohibit lenders from using medical information in their lending decisions.” Agency Director Rohit Chopra said, “people who get sick shouldn’t have their financial future upended.”
The same day, trade groups Consumer Data Industry Association and Cornerstone Credit Union League filed a lawsuit in the U.S. District Court, Eastern District of Texas, to prevent the rule from coming into effect.
“If not overturned, the Final Rule’s impact will be significant and immediate,” the lawsuit said, arguing that having information about consumer debts is critical for lenders. Eliminating medical debts from credit reports “erodes the predictive nature and therefore the value” of these reports.
“This leads to worse credit decisions, which in turn will harm consumers in the form of higher delinquency and default rates and increased costs of credit,” the complaint said. […]
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