Top Republican Knocks CFPB, Credit Bureaus on Exclusion of Medical Debt

Source: American Banker (subscription may be required)

The federal government inappropriately pressured major credit bureaus to remove most medical debt from consumer credit reports, a move that ultimately will curtail — not expand — the availability of loans, a top Republican argued Tuesday.

Speaking during a Senate Banking Committee hearing on medical debt, Sen. Pat Toomey, R-Pa., criticized a decision announced this month by the three major credit bureaus — Equifax, Experian and Transunion — that will eventually result in the elimination of nearly 70% of medical debt from consumer credit reports. Toomey, the committee's ranking Republican, argued that any action that limits lenders' access to consumer information could be harmful to the financial system.

“Pricing risk accurately is critical to the safety and soundness of financial institutions, and to consumers’ ability to access affordable credit,” Toomey said during opening remarks. “Lenders who cannot access information that they consider predictive of risk are likely to restrict their lending to the borrowers with the thickest credit files, seek out relevant proxies for the credit information they aren’t able to obtain, or increase the price of loans to all borrowers in order to capture the uncertainty and risk."