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The
Consumer Financial Protection Bureau rule will remove $49
billion in medical debt from the credit reports of more than 15
million Americans, according to the bureau, which means lenders
will no longer be able to take that into consideration when
deciding to issue a loan.
The change is estimated to raise the credit scores by an average
of 20 points and could lead to 22,000 additional mortgages being
approved every year, according to the bureau. Vice President
Kamala Harris said in a statement announcing the rule that it
would be “lifechanging” for millions of families.
“No one should be denied economic opportunity because they got
sick or experienced a medical emergency,” she said.
Harris also announced that states and local governments have
used a sweeping 2021 pandemic-era aid package to eliminate more
than $1 billion in medical debt for more than 700,000 Americans.
The administration announced plans for the rule in fall 2023.
The CFPB said that medical debt is a poor predictor of an
individual's ability to repay a loan. Experian, Equifax and
TransUnion, the three national credit reporting agencies, said
last year that they were removing medical collections debt under
$500 from U.S. consumer credit reports.
The new rule from the Biden administration is set to take on the
outstanding bills appearing on credit reports.
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