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This repeals previous Biden-era rules and regulations that
allowed states to implement their own credit reporting bans.
More than a dozen states like New York and Delaware prohibit the
reporting of medical debt on a consumers’ credit report.
Medical debt is often the most disputed part of a consumer’s
credit report, because insurance payments can take time, and
oftentimes patients do not have the means to fully pay a medical
bill if insurance is not covering a procedure that has already
taken place.
The three credit bureaus jointly announced in 2023 they would no
longer track any medical debts below $500, which at the time the
bureaus said would eliminate 70% of all medical debts reported
on consumers’ credit files. But some states have gone further
than that. New York, Delaware and others passed laws where
medical debts can no longer be reported to the credit bureaus.
The CFPB, which is largely not operating at the moment with the
exception of actively repealing previous rules written under
President Biden or earlier, says in its rule that Congress
intended to “create national standards for the credit reporting
system” under the FCRA and state laws run afoul of that
intention.
The Kaiser Family Foundation estimates that Americans owe
roughly $220 billion in medical debt. In Republican-controlled
states like South Dakota, Mississippi, West Virginia and
Georgia, roughly one in six Americans have outstanding medical
debt, according to the KFF.
Having outstanding, delinquent medical debt can impact the
ability for an individual to apply for a mortgage, a credit card
or an auto loan.
A spokesperson for the Bureau did not immediately respond to a
request for comment.
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