The Consumer Financial Protection Bureau (CFPB) has finalized a rule removing approximately $49 billion in medical debt from credit reports, impacting an estimated 15 million Americans. As a result, individuals with medical debt may see their credit scores increase by an average of 20 points, allowing for around 22,000 additional affordable mortgages to be approved annually. The rule prohibits consumer reporting agencies from including medical debt in credit reports, preventing creditors from using such debts in lending decisions. This follows research indicating that medical bills do not reliably predict loan repayment.
Medical debt is a significant issue in the U.S., affecting over 100 million people and comprising the largest type of debt in collections. Many consumers face erroneous medical bills and are often charged for costs that should be covered by insurance. In conjunction with the rule, Vice President Kamala Harris announced over $1 billion in medical debt relief for 750,000 individuals across various states and cities. Additionally, the American Rescue Plan Act may help eliminate up to $7 billion in medical debt for nearly 3 million Americans by 2026, reinforcing that no one should lose economic opportunities due to health issues.
