April 9, 2004
Federal regulators will soon issue a proposed rule governing when a creditor can obtain and use medical information in connection with credit decisions.
The Fair and Accurate Credit Transactions Act of 2003 (the "FACT Act") prohibits a creditor from obtaining or using medical information in connection with any consumer credit decision. Under the FACT Act, bank regulators may create exceptions to this rule and to the restrictions on sharing medical-related information with affiliates.
As proposed, creditors may obtain and use medical information in determining credit eligibility if the information relates to debts, expenses, income, benefits, collateral, or the purpose of the loan; the creditor uses the information in a manner and to an extent no less favorable than it would use comparable non-medical information; and the creditor does not take the consumer's physical, mental or behavioral health, condition or history into account. For example, an unpaid hospital bill could impact a consumer's credit eligibility, but the reason for the hospital stay cannot.
Creditors can also obtain and use medical information in determining credit eligibility under certain circumstances, such as when determining whether a power of attorney is necessary; when included in a report from a consumer reporting agency as permitted by FCRA; for fraud prevention and detection; for financing medical products or services; or if the consumer makes such a request in writing.
Congress directed the bank regulators to create appropriate exceptions to this rule and to the restrictions on sharing medical-related information with affiliates. Comments will be due 30 days after the rule is published.