The Consumer Financial Protection Bureau (CFPB) has finalized a rule that will remove an estimated $49 billion in medical debt from credit reports, leading to potential credit score increases and improved access to affordable mortgages.
The Consumer Financial Protection Bureau ( CFPB ) has finalized a rule that will remove an estimated $49 billion in medical bills from credit reports. With the change, Americans with medical debt could see their credit scores increase by an average of 20 points, the CFPB reported. Vice President Kamala Harris also announced more than $1 billion in medical debts have been eliminated.
The CFPB said the change is also expected to result in the approval of about 22,000 additional affordable mortgages every year. The rule prohibits consumer reporting agencies from including medical debt information with credit reports and credit scores sent to lenders. Additionally, creditors will no longer be able to use certain medical information for lending decisions. More than 100 million Americans struggle with medical debt, which comprises the largest type of debt in collections ahead of auto loans, credit cards and utilities, according to the Biden-Harris administration. Consumers are often asked to pay balances that should be covered by health insurance or financial assistance programs, and also frequently report receiving inaccurate medical bills, according to the CFPB. The CFPB's move comes after its own research found medical bills on credit reports are not good predictors of whether someone will repay a loan. CFPB Director Rohit Chopra said in a statement, 'The CFPB's final rule will close a special carveout that has allowed debt collectors to abuse the credit reporting system to coerce people into paying medical bills they may not even owe.
MEDICAL DEBT CREDIT REPORTS CONSUMER PROTECTION CFPB FINANCE
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