SB 1061 (Limón) Removing Medical Debt from Credit Reports

Read the Factsheet

More than one in three Californians have
medical debt . . .

When someone has unaffordable medical expenses those unpaid bills often turn into medical debt that is
included on their credit report. This damages their credit score and may affect their ability to get an
affordable car loan or a mortgage, to rent an apartment, and even to get certain jobs.

. . . but medical debt is an extremely poor predictor of creditworthiness!

Medical debt is not like other voluntary types of credit. Californians incur medical debt because they need
health care. Medical debt is involuntary and is a bad predictor of whether a consumer will default on future
loans. In other words, medical debt does not belong on credit reports.
The line-items on credit reports for medical debt are especially inaccurate because healthcare providers’
billing systems are particularly error-prone, with at least two in five Americans having received an erroneous
medical bill. All too often what is sent to credit reporting agencies like Equifax, Experian, and TransUnion is
a debt for the wrong amount, a debt already paid, a debt that is the subject of an insurance dispute, or even
a debt for a cost never actually incurred.

Californians deserve a system that does not punish them for seeking medical help when they need it.

What does SB 1061 do?

  • Prohibits Consumer Reporting Agencies (CRAs) from including medical debt on credit
    reports by adding it to the list of information that they cannot report.
  • Ensures that Californians’ personal information is protected by mandating that medical
    debt contracts include a provision preventing medical debt information from being shared
    with CRAs.
  • Enforces the exclusion of medical debt on credit reports by declaring medical debt void if
    information regarding that debt is provided to a CRA.
  • Implements tracking of Californians’ medical debt disputes by requiring hospitals

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