The PATCH Act amends the Fair Credit Reporting Act to prohibit the inclusion of adverse medical debt information in consumer credit reports and bars creditors from using such information in credit decisions.
John Kennedy
Senator
LA
The PATCH Act amends the Fair Credit Reporting Act to prohibit consumer reporting agencies from including adverse medical debt information in consumer credit reports. This legislation specifically defines medical debt and prevents creditors from using this information when making credit decisions. The goal is to protect Americans from credit harm resulting from medical expenses.
PATCH Act Bans Medical Debt from Credit Reports: New Protections for Healthcare Costs Kick Off Within One Year.
The Protecting Americans from Treatment-related Credit Harm (PATCH) Act is a direct overhaul of how your credit score handles medical emergencies. Under this bill, credit reporting agencies are strictly prohibited from including any 'adverse information'—think late payments, collections, or charge-offs—related to medical debt in your consumer credit report. By defining medical debt broadly as any debt arising from medical services, products, or devices, the bill ensures that an expensive surgery or an unexpected ER visit doesn't tank your credit score for years to come (Section 2). While agencies can still keep this data in their internal files, they are legally barred from sharing it with the banks or landlords who pull your report.
Scrubbing the Record
This legislation effectively creates a firewall between your health history and your financial reputation. For example, if a freelance graphic designer undergoes an emergency appendectomy and the resulting $5,000 bill goes to collections while they fight with insurance, that 'ding' currently stays on their credit report, making it harder to get a car loan or rent an apartment. The PATCH Act changes that reality by amending Section 605(a) of the Fair Credit Reporting Act to exclude these specific debts from the reports used by the outside world. It treats medical debt as a unique financial burden—often involuntary and unpredictable—rather than a reflection of how responsibly you manage your elective spending.
Closing the Loophole for Lenders
To make sure banks don't find a workaround, the bill gives the Consumer Financial Protection Bureau (CFPB) exactly one year to update federal regulations (specifically 12 CFR 1022.30). This update will explicitly ban creditors from even obtaining or using medical debt information when they are deciding whether to give you a loan or a credit card (Section 3). This means a small business owner applying for a line of credit won't have to worry about a past-due bill for a CPAP machine or physical therapy sessions being used against them during the approval process. By removing the data from the report and then telling lenders they can't look for it elsewhere, the bill aims to keep healthcare costs from becoming a permanent barrier to financial mobility.