NEW YORK (AP) – The Trump administration is moving to overturn state laws that could protect consumers’ credit reports. from medical debt and other debt issues.
The Consumer Financial Protection Bureau drafted what is known as the Fair Credit Reporting Act Interpretation Rule, interpreting the law to mean that the FCRA should supersede state laws and regulations regarding how debts are reported to credit bureaus such as Experian, Equifax, and Trans Union.
This makes the previous content obsolete Biden-era rules and regulations This allowed each state to implement its own credit reporting ban. More than a dozen states, including New York and Delaware, prohibit medical debt from being reported on consumer credit reports.
Medical debt often takes longer to pay for insurance and is often the most contested part of a consumer’s credit report. patient does not have Means to pay medical expenses in full Insurance does not apply Procedures that have already been carried out.
The three credit bureaus jointly announced that they would no longer track medical debts under $500 in 2023, which each credit bureau said would eliminate 70% of all reported medical debt at the time. consumer credit file. but some states It goes further than that. States like New York and Delaware have passed laws that make it impossible to report medical debt to credit bureaus.
The CFPB has little to do at this point other than proactively repealing previous rules enacted before President Biden, but in its rules it states that Congress intended to “create national standards for credit reporting systems” under the FCRA and that the state law violates that intent.
The Kaiser Family Foundation estimates that Americans owe about $220 billion in medical debt. In Republican-controlled states like South Dakota, Mississippi, West Virginia and Georgia, about 1 in 6 Americans has unpaid medical debt, according to KFF.
Being behind on outstanding medical debts can affect an individual’s ability to apply for a mortgage, credit card, or car loan.
A spokesperson for the department did not respond to a request for comment.
