The Consumer Financial Protection Bureau (CFPB) has announced the finalization of a rule that will remove medical debt from credit reports, a move expected to significantly impact the financial health of millions of Americans. This action will raise credit scores by an average of 20 points for over 15 million individuals and is projected to result in the approval of approximately 22,000 additional mortgages annually.
Under the new rule, no Americans will have medical debt listed on their credit reports—a major shift from 2020, when 46 million people had medical debt reported. CFPB research highlights that medical bills are often inaccurate, confusing, and not reliable indicators of a person’s ability to repay loans.
A March 2022 CFPB report estimated that medical bills accounted for $88 billion of reported debt. In response, the three largest credit reporting agencies voluntarily stopped including paid medical debts, unpaid debts less than a year old, and medical debts under $500. However, 15 million Americans still face $49 billion in unpaid medical bills reported on their credit files.
The CFPB’s new rule will eliminate these outstanding debts from credit reports, providing relief to those affected. Advocates of the rule argue that it addresses the challenges many Americans face with medical billing errors and unexpected medical expenses, while also improving access to loans for housing, education, and small businesses.
The rule is part of a broader effort to reform how medical debt is treated in financial systems and alleviate the burden of healthcare costs on American families.
