H.R. 3421: To exclude from consumer credit reports medical debt that has been in collection and has been fully paid or settled, and for other purposes

H.R. 3421

To exclude from consumer credit reports medical debt that has been in collection and has been fully paid or settled, and for other purposes

Date
September 22, 2010 (111th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

H.R. 3421 is expected to be considered on the floor of the House on Wednesday, Septemer 29, 2010, under a motion to suspend the rules, requiring a two-thirds majority vote for passage.  The legislation was introduced on July 30, 2009 by Rep. Mary Jo Kilroy (D-OH) and referred to the Committee on Financial Services.

 

Bill Summary

H.R. 3421 would prohibit credit reporting agencies from listing medical debts that have been paid or settled in consumer credit reports if those debts were paid or settled more than 45 days before the credit report is issued.

 

Background

According to credit evaluators, medical debt collections are more likely to be in dispute, inconsistently reported, and of questionable value in predicting future payment performance because they are atypical and nonpredictive.  Medical debt that has been completely paid off or settled can significantly damage a consumer's credit score, resulting in higher interest rates for loans or being denied credit.

  • Some members may be concerned that the federal government would dictate to private market actors terms for determining individuals’ credit viability.  Credit scoring agencies have robust quantitative methods for calculating individual credit ratings, which may include payment or delinquency of medical debt.  Government intervention in a person’s credit history could distort lending decisions and lead to the misallocation of capital, as creditworthy individuals subsidize those with blemished credit.  Limiting the credit experts from considering all types of information could ultimately lead to less reliable credit reporting.

 

Cost

CBO estimates that implementing H.R. 3421 would not significantly increase spending subject to appropriation.  Enacting H.R. 3421 could increase the collection of civil penalties and thus could affect federal revenues; therefore, pay-as-you-go procedures apply.  However, CBO estimates that such collections would not be significant in any year.