COLUMBIA, Mo. (KMIZ)
Unpaid medical bills will no longer affect credit scores after the Consumer Financial Protection Bureau on Tuesday finalized a rule to remove an estimated $49 billion in medical bills from the credit reports of about 15 million Americans.
According to a 2024 study from the Missouri Foundation of Health, in a survey of 2,047 Missourians, half reported having medical debt in the past five years. The report says 78% of people in the survey were insured.
Three-in-10 adults reported that medical debt negatively affected their credit score, 22% of people said debt impacted their ability to apply for a car loan and 19% said debt affected their ability to apply for an apartment or mortgage.
“People who get sick shouldn’t have their financial future upended,” 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 consumer reports, the bureau found that a medical bill on a person’s credit report was a poor predictor for loan repayment. When the rule takes effect, Americans with credit card debt can see a credit score rise by an average of 20 points.
Following a 2022 CFPB study, credit reporting agencies stopped reporting medical debts under $500 and began reporting debts over $500 only after a year, giving people more time to address them.
According to CNN, the ruling was proposed last June and was finalized by the Biden administration. However, Republican lawmakers in Congress can review or rescind rules during a transition of power.
If not rescinded or delayed, the rule will be effective 60 days after being added to the Federal Register.
