No longer allowing unpaid medical bills to appear on credit reports could raise credit scores by an average of 20 points and approve 22,000 more mortgages per year.
Vice President Kamala Harris said the final rule would be “lifechanging” for millions of Americans in a statement Tuesday, as reported by the Associated Press.
According to a White House press release, more than 100 million Americans have medical debt, which is also the largest source of debt collections.
The appearance of unpaid medical bills on credit reports has blocked mortgage, car loans and small business loan approvals.
More than 15 million Americans will have $49 billion in medical debt removed from their credit reports by the Consumer Financial Protection Bureau rule. Lenders will no longer be able to take medical debt into consideration when deciding approval of a loan.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” Harris said.
Harris announced that more than $1 billion in medical debt was eliminated for more than 700,000 Americans by state and local governments with the 2021 American Rescue Plan pandemic-era aid package.
Medical debt is not a good predictor of whether an individual can repay a loan, according to the CFPB. In 2024, Experian, Equifax and TransUnion said that medical collections debt under $500 would be removed from U.S. consumer credit reports. The Biden Administration‘s new rule will go after outstanding bills on credit reports.
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Rebecca Barnabi
