WASHINGTON (dpa-AFX) - The Consumer Financial Protection Bureau, or CFPB, has proposed a rule that would remove medical bills from most credit reports.
The change in rule, announced by Vice President Kamala Harris and CFPB Director Rohit Chopra, would remove medical debt from credit reports of more than 15 million Americans, raising their credit scores by an average of 20 points and leading to the approval of approximately 22,000 additional mortgages every year.
Announcing this via teleconference, Vice President Kamala Harris said, 'We will soon make it so that medical debt can no longer be included in your credit score. We are making it so that medical debt cannot be used against you when you apply for a car loan, a home loan, or a small-business loan or something of that nature'.
As a result of this change, millions of Americans will see an increase in their credit score, on average, of 20 points, which will mean every year an estimated 22,000 more American families will be approved for a mortgage and able to buy a home.
Under the proposed rule, there would be zero Americans with medical debt listed on their credit reports, down from 46 million in 2020. The Vice President also called upon states, local governments, and health care providers to take additional actions to reduce the burden of medical debt for millions of Americans.
The proposal would increase privacy protections, help to increase credit scores and loan approvals, and prevent debt collectors from using the credit reporting system to coerce people to pay. It would also stop credit reporting companies from sharing medical debts with lenders and prohibit lenders from making lending decisions based on medical information.
The CFPB is proposing to close the regulatory loophole that has kept vast amounts of medical debt information in the credit reporting system. The proposed rule would help ensure that medical information does not unjustly damage credit scores, and would help keep debt collectors from coercing payments for inaccurate or false medical bills.
The proposed rule is part of the CFPB's efforts to address the burden of medical debt and coercive credit reporting practices.
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