The CFPB projects that by removing medical debts from credit reports, around 15 million Americans will benefit, leading to significant improvements in credit scores and granting access to approximately 22,000 more low-cost mortgages each year.
The lawsuit from credit reporting and credit union groups argues that the new rule infringes on the Fair Credit Reporting Act, suggesting that the regulation contradicts established law allowing medical debts to be reported.
By prohibiting lenders from considering specific medical information, the new regulation aims to reduce the pressure on consumers from debt collectors pursuing payments for debts that may not be valid, thereby promoting financial fairness.
The Consumer Financial Protection Bureau maintained that the presence of medical debt on credit reports does not accurately reflect a consumer's ability to repay loans, justifying the overhaul in credit reporting practices.
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