Biden Administration Rule Bans Medical Debt From Credit Reports

The rule from the Consumer Financial Protection Bureau will effectively remove $49 billion in medical debt for 15 million Americans, clearing the way for them to access a better credit rating.

On Jan. 7, the Biden administration announced a final rule that stops unpaid medical bills from appearing on credit reports.

According to CBS News, the rule from the Consumer Financial Protection Bureau (CFPB), will effectively remove $49 billion in medical debt for 15 million Americans, clearing the way for them to access a better credit rating by raising scores an average of 20 points and potentially leading to the approval of 22,000 more mortgages every year.

In a press release from the White House, Vice President Kamala Harris said the rule change “will be life-changing” for millions of American families, “making it easier for them to be approved for a car loan, a home loan, or a small-business loan.”

According to NPR, the move from the Biden administration is in line with a growing body of research that credit scores that are depressed by medical debt can threaten access to secure housing and increasing homelessness.

Despite this, the collections industry, which relies on selling and collecting debt, medical or otherwise, has been pushing back on the rule.

Republicans like Patrick McHenry, (R-NC), the chair of the House Financial Services Committee in 2024, have been critical. McHenry went as far as to refer to the then-proposed rule as “regulatory overreach.”

Delete CFPB. There are too many duplicative regulatory agencies.
— Elon Musk (@elonmusk) November 27, 2024

Elon Musk, who will likely have considerable influence in President-elect’s Donald Trump’s approach to government, has also called for the elimination of the CFPB on social media.

The purpose of the CFPB, according to USA.gov, is to “help(s) consumers by providing educational materials and accepting complaints. It supervises banks, lenders, and large non-bank entities, such as credit reporting agencies and debt collection companies. The Bureau also works to make credit card, mortgage, and other loan disclosures clearer, so consumers can understand their rights and responsibilities.”