WASHINGTON (TNND) — The Consumer Financial Protection Bureau finalized a rule Tuesday that it says will erase $49 billion in unpaid medical bills from the credit reports of roughly 15 million Americans.
For nearly a decade, Joan Villavicencio, who lives in Naples, Florida, has had to open her credit report and stare at medical debt.
“It’s been nearly ten years now, 2015, and this is still kind of lingering,” Villavicencio said.
Villavicencio says she doesn’t have much to pay off and the debt hasn’t impacted her score too significantly, but she has run into lenders asking what it is.
It is kind of annoying that you have to clarify that it’s not a credit card or a personal loan or something you defaulted on. It’s just medical debt that still lingers on the credit report,” said Villavicencio.
To help improve her credit, Villavicencio is working with Ashley Deal, a credit repair specialist in Southwest Florida. Deal believes eliminating this debt from reports could help boost credit scores well over the estimated 20 points.
“I think you can go up from 20-60 points alone just from that,” Deal said.
She says medical debt was already excluded from certain FICO models for homebuying, but this new rule could impact other FICO scores, like when you apply for a car loan.
“Those scores are going to go up drastically just from not having those medical collections on people’s credit reports,” said Deal.
Something Villavicencio says she’s looking forward to along with potentially buying real estate once this debt is taken off.
“Whether it’s a vacant lot or building a house, anything like that, we know that we want our credit to be as top tier as it can be,” said Villavicencio.
The rule is scheduled to take effect in March but that could be delayed by legal challenges.
