The Biden administration unveiled a new rule on Tuesday that will eliminate medical debt and unpaid medical bills from credit reports, a move aimed at removing financial barriers for millions of Americans.
The rule is set to prevent unpaid medical bills from negatively impacting credit scores, which often hinder individuals from securing mortgages or loans.
The Consumer Financial Protection Bureau (CFPB) finalized the regulation, which will remove approximately $49 billion in medical debt from the credit reports of about 15 million Americans.
The rule also bans lenders from using medical information in their lending decisions and prohibits the inclusion of medical debt on credit reports used by financial institutions.
The rule will go into effect 60 days after its publication in the Federal Register.
According to the CFPB, this change is anticipated to increase credit scores by an average of 20 points, potentially resulting in 22,000 additional mortgages being approved annually.
“People who get sick shouldn’t have their financial future upended,” said CFPB Director Rohit Chopra. “This rule will stop debt collectors from using the credit reporting system to pressure people into paying medical bills they may not even owe.”
Vice President Kamala Harris hailed the move