Section 604(G) of the Fair Credit Reporting Act (FCRA) limits the circumstances under which consumer reporting agencies can furnish reports that contain medical information about consumers. “Medical information” is created by or derived from:
Credit unions should care about these restrictions because “medical information” includes consumer report data related to medical debts. The definition of medical information doesn’t include the age or gender of the consumer, demographic data, or anything unrelated to the physical, mental, or behavioral health or condition of the consumer, including the existence or value of any insurance policy.
FCRA prohibits creditors from obtaining or using a consumer’s medical information to determine eligibility for credit. But FCRA regulations contain exceptions to the general statutory prohibition on obtaining and using medical information, including exceptions for the use of medical information that’s also financial-related and typically considered in credit underwriting.
Financial information exception
Under the “financial information exception,” credit unions may obtain and use medical information to determine credit eligibility if:
The following example is consistent with the financial information exception:
A member’s credit application includes two $20,000 debts, one to a hospital and the other to a retailer. Both debts are more than 90 days past due. Any two debts of this size that are more than 90 days past due disqualify an applicant under the credit union’s established underwriting criteria. The credit union denies the application on the basis that the member has a poor repayment history on outstanding debts. In this case, the credit union has used medical information in a manner and to an extent no less favorable than it would use comparable nonmedical information. On the other hand, the institution would have violated the regulation if it applied more onerous lending criteria just because the member had substantial medical debt or serious health condition.
A creditor also may obtain such information in connection with determining credit eligibility if it’s unsolicited. For example:
None of these examples would violate the general prohibition on obtaining medical information from a consumer. The credit union can use this unsolicited information in credit eligibility determinations so long as the usage meets either the financial information exception, or one of the additional exceptions
Next: Additional exceptions