Biden Administration Ends Reporting of Medical Debt on Credit Reports

A new rule finalized by the Biden administration removes unpaid medical bills from consumer credit reports, preventing them from hindering access to mortgages, auto loans, and small business loans.

This Consumer Financial Protection Bureau (CFPB) action eliminates approximately $49 billion in medical debt from the credit reports of over 15 million Americans, rendering this debt irrelevant in loan applications.

The CFPB projects this change will boost credit scores by an average of 20 points, potentially resulting in 22,000 additional mortgage approvals annually. Vice President Harris lauded the rule’s potential to be “lifechanging” for millions of families.

She emphasized that economic opportunities shouldn’t be jeopardized due to illness or medical emergencies.

Harris also highlighted state and local government initiatives that have erased over $1 billion in medical debt for more than 700,000 individuals.

The administration initially announced plans for this regulation in the fall of 2023.

The CFPB cited medical debt as a poor indicator of loan repayment ability. Experian, Equifax, and TransUnion—the three major credit reporting agencies—previously announced the removal of medical collections debt under $500 from consumer credit reports.

The Biden administration’s new rule addresses the remaining outstanding medical bills on credit reports.