Medical debt in credit reports: Fix third-party billing errors first

Safe, accessible credit is essential when consumers face a necessity but find it challenging to afford. Including medical debt in credit reports unfairly penalizes consumers already burdened by medical expenses or grappling with inaccurate billing. The consequences can be severe, especially for young military families planning for their financial futures.

The Consumer Financial Protection Bureau (CFPB) recently proposed new regulations to remove medical debt from Americans’ credit reports. Unfortunately, the relief would not extend to medical credit cards, according to Chopra during his exchanges with Congress members Blaine Luetkemeyer (R-MO) and Rashida Tlaib (D-MI) two weeks ago.

“Medical credit cards are [a] fairly more advanced innovation of recent years,” said Chopra. “We have been studying this market because it’s been growing quite quickly, and it has been a source of some significant consumer complaints. We have not taken any sort of specific action on it.”

While this proposed regulation acknowledges the unfair impact of medical debt on credit scores and seeks to lessen the overall financial burden on consumers, it still excludes medical credit cards from the equation. Medical credit cards, a relatively new financial product, still remain largely unregulated.

Medical debt itself brings significant financial distress among consumers, but especially when inaccuracies or disputes arise over billing.

The issue of medical debt included in credit reporting was underscored in the Defense Credit Union Council’s (DCUC) congressional exchanges with former House Representative Jackie Speier in December 2019. DCUC discussed how this issue directly affects service members, veterans, and their families with Speier, and provided a link to the CFPB’s Annual Report, highlighted during DCUC’s 2019 Defense Matters Forum.

For military personnel and their families, medical debt subject to credit reporting often creates a more dire situation. These communities already face unique challenges with credit reporting due to frequent relocations and deployments. Any inaccurate information, including late payments mistakenly attributed to service members or veterans by third-party billing errors from insurance, such as Tricare, or medical providers, can severely impact their credit reports; Worse, it could also potentially jeopardize security clearances and good military standing.

America’s defense credit unions have highlighted issues such as these for years, emphasizing the profound financial toll this issue can have on military members and their families. Furthermore, the burden of proof often falls disproportionately on consumers to rectify any errors on their credit reports, a process that is notoriously complex and time-consuming. This can be even more exasperating for military members during life transitions such as permanent change of station (PCS moves) or deployments where addressing credit report errors becomes more challenging.

Knowing this, it’s easy to see why including medical debt in credit reports is not only unfair to consumers but increases the financial obstacles and burdens on all consumers, especially military and veteran communities. While the proposed CFPB regulation is a positive step toward improved consumer protection, there is still a need for more regulatory efforts to ensure a fully comprehensive solution is presented on this issue.

As these discussions continue, we must press policymakers to prioritize safeguarding consumers’ financial prosperity and protecting vulnerable consumers. Credit reporting must accurately reflect individuals’ financial responsibility and should not unjustly penalize consumers for seeking to afford necessary medical treatment.


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Anthony Hernandez

Anthony Hernandez

Anthony Hernandez is the President and Chief Executive Officer of the Defense Credit Union Council (DCUC).  He joined DCUC as its Chief Operating Officer in August 2016 and was selected ... Web: Details