Vice President Harris announced on Tuesday the final ruling of the Consumer Financial Protection Bureau to remove medical debt from consumer credit reports, which would reduce the burden of medical debt and ensure that patients are not denied access to credit due to unpaid medical bills.
With the finalization of the Consumer Financial Protection Bureau’s ruling, more than 15 million Americans will have medical debt removed from their credit reports. This ruling is estimated to raise credit scores by an average of 20 points. Increasing the likelihood of approval for credit, mortgages, and loans.
The ban comes as part of the Biden administration’s plan to forgive $7 billion by 2026. It is currently reported that states and localities have eliminated over $1 billion in medical debt for more than 700,000 Americans through the support of the American Rescue Plan (ARP).
Vice President Harris stated:
Today, we are building on this meaningful work by announcing an unprecedented final rule that will make it so medical debt is no longer included in your credit score. This will be lifechanging for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan. As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive.
The ruling comes after a report released by the Consumer Financial Protection Bureau in 2022 estimating that medical bills made up $88 billion of reported debts on credit reports. In response, the three largest credit reporting agencies voluntarily enacted changes, such as, no longer including paid medical debts, unpaid medical debts less than a year old, and medical debt under $500 from credit reporting. Nevertheless, 15 million Americans still have $49 billion in outstanding medical bills. This current ruling will ensure that the $49 billion in outstanding medical bills are removed, leaving zero Americans with medical debt listed on their consumer report.
President Biden’s outgoing administration announced in October 2024, its measures aimed at guaranteeing debt relief. Harris initially announced the Consumer Financial Protection Bureau’s plan to implement the ban in June.
