Is Removing Medical Debt From Credit Scores with FCRA Regulation V Actually Good For Consumers?

The stated reasoning for FCRA Regulation V, CFPB's rule to remove medical debt from credit scores, was consumer protection. Ironically, it could end up jeopardizing consumers more than protecting them.

A Letter from SOLO's Founder: Instead of Removing Medical Debt, Create a Context Aware Credit System that Accounts for Nuance

I’ve been supportive of 1033 and other initiatives that the CFPB has spearheaded but the flood of new policies unleashed in the last week, including the one to remove medical debt from credit reports, looks more like a political power play — ironically at the cost of consumers.

Their rationale? Medical debt is often involuntary, unlike credit cards or loans, so it shouldn’t factor into creditworthiness. But this oversimplified logic misses the point: removing context doesn’t create equity. Fairness isn’t about erasing nuance; it’s about understanding it.

Instead of erasing records, a better solution would be regulating how different debts are assessed.

I agree that medical debt should not cost you the roof over your head (it could be governed to not count towards a score used for a mortgage or rental) but maybe you should not be qualifying for a small business loan if you are unable to manage unexpected expenses? Another reason why one score will never be conclusive in every context — but more on that later.

This policy ignores a fundamental truth: financial well-being follows a hierarchy, much like Maslow’s needs. Exposing consumers to high-risk loans without this foundation isn’t protection; it’s reckless at best and predatory at worst.

If the true goal is consumer protection, we should embrace nuance and regulate context — not erase it. Simplifying at the expense of accountability and risk management serves absolutely no one.