A new rule from the Consumer Financial Protection Bureau (CFPB) will remove up to $49 billion in medical debt from the credit reports of 15 million Americans. This change is expected to significantly improve financial opportunities for millions, making it easier to secure loans for houses, cars, or small businesses. The rule also aims to enhance privacy protections and prevent debt collectors from using the credit reporting system to pressure individuals into paying bills they may not owe. The CFPB estimates that credit scores will rise by an average of 20 points, and an additional 22,000 mortgages will be approved annually.
t to credit bureaus, which can impact consumers’ ability to get a loan for a house, car or small business, will remove some $49 billion from the credit reports of 15 million Americans.in medical debt“This will be lifechanging for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan.
The Consumer Financial Protection Bureau said the new rule will also increase privacy protections and prevent debt collectors from using the credit reporting system to coerce people to pay bills they don’t owe. “People who get sick shouldn’t have their financial future upended,” said 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.”
According to CFPB, the change will raise credit scores by an average of 20 points and help an additional 22,000 mortgages get approved every year. The agency said that medical debt is a bad predictor of a person’s ability or likeliness to repay a loan. Under the new rule, lenders will no longer be able to consider medical information when making a loan.
It comes after the three major credit reporting companies — Equifax, Experian and TransUnion — stopped including medical debt balances under $500 on reports in 2022.
MEDICAL DEBT CREDIT SCORES CONSUMER PROTECTION LOAN APPROVAL CFPB
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