US bans medical debt from credit reports as Biden nears exit | health News
The Consumer Financial Protection Bureau says the change would result in a loss of $49 billion in medical debt, according to credit reports.
Under the changes, consumers in the United States will no longer see medical debt on their credit reports, making it easier for millions of Americans to obtain debt.
The Consumer Financial Protection Bureau (CFPB) said Tuesday that the new rule means lenders will be barred from using medical information in their lending decisions.
Under the changes, an estimated $49 billion in medical debt will be removed from the credit reports of more than 15 million Americans, the CFPB said.
The consumer watchdog said its research showed that medical debt is a poor predictor of whether the loan will be repaid and it expected about 22,000 additional mortgages to be approved each year as a result of the change.
“People who get sick should not have their financial future ruined,” CFPB Director Rohit Chopra said in a statement.
“The CFPB’s final rule will close a special system that has allowed debt collectors to abuse the credit reporting system to force people to pay medical bills they may not even owe “
US Vice President Kamala Harris said the rule would “help more Americans save money, build wealth and get ahead”.
The measure comes less than two weeks before US President Joe Biden hands over control of the White House to US President-elect Donald Trump.
It’s unclear whether the rule, which takes 60 days to go into effect, will survive in its current form under Trump, who has promised to reduce government regulations and roll back much of Biden’s agenda.
Many Republicans expressed concern that the proposed change would weaken the accuracy of credit reports.
The Consumer Data Industry Association and other trade groups representing financial institutions opposed the change, while the American Medical Association supported the measure.
