The Consumer Protection Financial Bureau (CFPB) has reaffirmed that the federal Fair Credit Reporting Act (FCRA) broadly preempts state laws related to credit reporting, restoring a national standard intended by Congress when the law was enacted.
According to CUToday.Info, this action formerly replaces a 2022 interpretive rule that the CFPB had withdrawn earlier this year over concerns over confusion.
The new guidance, published in the Federal Register, reasserts that FCRA’s preemption provisions—particularly Section 1681t(b)(1)—were designed to establish uniform national rules for credit reporting and to prevent states from imposing additional or differing requirements on consumer reporting agencies, furnishers, or users of credit data.
The Bureau emphasized that the 2022 rule had incorrectly narrowed the scope of federal preemption by allowing states to regulate areas such as medical debt, rental information, or arrest records. According to the CFPB, the earlier interpretation contradicted both the plain text of the statute and Congress’s clear intent to create a consistent nationwide framework for credit information.
Consumer Protection Concerns
However, the inclusion of medical debt on the credit reports could have severe repercussions, especially as millions across the country are facing massive healthcare premium increases, reports Common Dreams.
Medical debt is a growing crisis in the United States: Roughly 14 million adults owe more than $1,000 in medical debt, and an estimated 20% of Americans have medical debt on their credit reports, the publication said.
Supporters of removing medical debt from credit reports argue it is not a reliable measure of creditworthiness. The Center for Consumer Law & Economic Justice at UC Berkeley notes that “medical debt often reflects the simple misfortune of getting sick unexpectedly and having to face a medical system that is rife with insurance stonewalling, delay, and mistakes.” More than a dozen states—including California, Colorado, and New York—have moved to curb the reporting of medical debt, which accounts for a significant percentage of personal bankruptcies in the US.
