Feds Move to Ban Medical Debt From Credit Reports

Rule change would prohibit lenders from evaluating it when dispensing loans
By Newser Editors and Wire Services
Posted Jun 12, 2024 7:09 AM CDT
Medical Debt May Be Scrubbed From Credit Reports
Medical debt would no longer factor into loan evaluations under the proposed changes.   (AP Photo/Jacquelyn Martin, File)

The Biden administration announced new rules Tuesday that would prevent medical debt from factoring into whether someone qualifies to rent an apartment, buy a car, or take on a mortgage. The Consumer Financial Protection Bureau said the changes would remove medical bills from credit reports and prevent lenders from making decisions based on medical information, per the AP. The proposed rules also would prevent lenders from repossessing medical devices like wheelchairs if people cannot repay a loan. The changes are expected to be finalized early next year.

"No one should be denied access to economic opportunity simply because they experienced a medical emergency," Vice President Kamala Harris said during a conference call. CFPB Director Rohit Chopra said the rule changes would prevent debt collectors "from using the credit report as a cudgel" to force people to pay bills they may not owe. The agency has said previously that medical debt can be a poor predictor of whether someone is likely to repay a loan.

The three national credit reporting agencies—Experian, Equifax, and TransUnion—said last year they were removing medical collections debt under $500 from US consumer credit reports. But the CFPB said that even with that change, 15 million people still have $49 billion in outstanding medical bills in collections appearing in the credit reporting system. The CFPB will take comments or feedback on its proposed rule until August 12. (Another pocketbook issue the White House is pushing ahead of the election: student debt relief.)

(More medical debt stories.)

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