Biden administration finalizes rule to strike medical debt from credit reports

American consumers will no longer have medical debt on their credit reports under a new rule the Biden administration finalized Tuesday.

The change, which administration officials proposed over the summer and will take effect in March, means that about $49 billion in medical bills will be removed from the credit reports of about 15 million Americans. The Consumer Financial Protection Bureau said lenders would also be prohibited from using medical information in their credit decisions.

“People who get sick should not have their financial future altered,” CFPB Director Rohit Chopra said in a statement. “The CFPB’s final rule will close a special exception that has allowed debt collectors to abuse the credit reporting system to force people to pay medical bills they may not even owe.”

About 1 in 12 U.S. adults have medical debt, according to a 2024 survey from KFF, a nonprofit group that researches health policy issues. The CFPB determined that a medical bill on a person’s credit report was a poor predictor of whether they would repay a loan, but contributed to thousands of denied mortgage applications.

The agency expects the rule to lead to the approval of about 22,000 additional mortgages each year, and that Americans with medical debt on their credit reports could see their credit scores increase by an average of 20 points.

The three major US credit agencies already announced in 2023 that previously paid medical debt, or any medical debt under $500, would no longer appear on credit reports.

The move comes as Biden administration officials rush to safeguard aspects of their work weeks before President-elect Donald Trump takes office. The White House, for example, on Monday announced a ban on new offshore oil and gas drilling along most of the US coast. When it comes to consumer financing, advocates are preparing for an expected rollback of certain safeguards imposed over the past four years by the CFPB, a high-profile goal of some Republican lawmakers and Trump allies, including Elon Musk.



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