Debt collection bill undermines consumer financial well-being

May 13, 2021

CUNA has significant concerns with the Comprehensive Debt Collection Improvement Act (H.R. 2547), it wrote to House leadership Thursday. Of primary concern is a provision that would prohibit credit scoring models from treating certain medical debt information as a negative factor on a credit report.

“Lenders rely on complete and accurate credit reports when underwriting loans. Restrictions on the reporting or consideration of certain debt prevents lenders from seeing borrowers’ complete debt circumstances and clouds lenders’ ability to fairly assess borrowers’ creditworthiness,” the letter reads. “An incomplete view of borrowers’ credit history reduces lender confidence in credit reports and scores, impacting pricing decisions and credit availability.

“The borrowers most impacted by the consequences of this provision will be low- and moderate-income borrowers whose financial well-being could benefit the most from access to affordable credit from a credit union,” it adds.

CUNA is also concerned that such a provision would set a precedent for prohibiting reporting of other debt.

“Borrowers and lenders alike benefit from a credit reporting system that produces an accurate and complete record of a borrower’s credit situation,” the letter reads. “This provision undermines consumers’ financial well-being and jeopardizes the ability of lenders to make safe and sound underwriting decisions.”

CUNA and other organizations wrote to House leadership earlier this week about another section of the bill that would reverse a unanimous U.S. Supreme Court decision clarifying that entities enforcing a security interest without also seeking repayment or deficiency judgment generally do not qualify as debt collectors under the Fair Debt Collection Practices Act (FDCPA).