Approximately 15 million Americans have medical debt on their credit reports, according to Consumer Financial Protection Bureau (CFPB) estimates. This debt harms their credit scores, impeding their ability to borrow money, rent apartments, qualify for mortgages, and even secure employment. A direct line can be drawn from many Americans’ medical debt to their financial insecurity.
This is not what Congress intended when it passed the Fair and Accurate Credit Transactions Act of 2003 (FACT Act”. Among other things, the FACT Act generally prohibited creditors’ ability to access information relating to consumers’ medical debts when making credit decisions. But in 2005, several federal financial regulatory agencies and the National Credit Union Administration issued a regulatory exception to this prohibition, allowing creditors to obtain and use consumers’ medical financial information in connection with determining their eligibility for credit if certain conditions were met.
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