The Biden administration has introduced a new rule through the Consumer Financial Protection Bureau (CFPB) that will remove medical debt from consumer credit reports. The rule is expected to take effect 60 days after it is officially published.
This change will eliminate about $49 billion in medical debt from the credit reports of over 15 million Americans. The CFPB believes medical debt does not accurately reflect a person’s ability to repay loans. As a result, many people could see their credit scores go up by an average of 20 points, making it easier to qualify for loans, mortgages, and other financial services.
Supporters say this move will help reduce financial stress caused by medical bills. However, critics, including the American Bankers Association, worry that it could lead to higher financial risks and more expensive credit.
There is also uncertainty about the rule’s future enforcement, as the incoming Trump administration could challenge or reverse it.
