The proposed regulation would forbid lenders from making choices based on medical information and restrict credit reporting firms from disclosing medical debts to lenders.

According to the agency, this would erase up to $49 billion in medical debt, which has a negative impact on 15 million Americans' credit ratings. Additionally, it would strengthen privacy safeguards, improve credit ratings and loan acceptance rates, and stop debt collectors from exploiting credit reporting information to threaten payment.

Congress placed restrictions on lenders' ability to access and use medical information, including debt-related information, back in 2023. Federal agencies did, however, subsequently grant a unique provision, enabling creditors to include medical obligations when making judgments.

Now, the CFPB is attempting to narrow this loophole, claiming that medical bills on a credit report do not, in fact, serve as a reliable indicator of a person's ability to repay a loan.

Director of the Consumer Financial Protection Bureau Rohit Chopra states: "Medical bills on credit reports are too often inaccurate and have little to no predictive value when it comes to repaying other loans."