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The Biden administration is proposing a new rule that would ban medical debt from appearing on credit reports. The rule has been in the works for several months and will likely take effect next year.
“Our research shows that medical bills on your credit report aren't even predictive of whether you'll repay another type of loan. That means people's credit scores are being unjustly and inappropriately harmed by this practice,” Consumer Financial Protection Bureau Director Rohit Chopra told ABC News ahead of the planned announcement.
The new rule would help boost the credit scores of millions of Americans. According to a report from the CFPB, around 15 million Americans have $49 billion of medical debt that is weighing down their credit scores, making it harder and more expensive for them to buy a home or car.
Under the proposed rule, the agency estimates an additional 22,000 people per year could be approved for a safe mortgage.