CHARLOTTE — (AP) — Unpaid medical bills will no longer appear on credit reports, The Associated Press reports, citing a final rule announced Tuesday by the Biden administration.
The AP says the Consumer Financial Protection Bureau rule will reportedly remove $49 billion in medical debt from the credit reports of more than 15 million Americans, which means lenders will no longer be able to take that into consideration when deciding to issue a loan.
The change is estimated to raise the credit scores by an average of 20 points and could lead to 22,000 additional mortgages being approved every year, according to the bureau.
“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” she said.
Harris also announced that states and local governments have used a sweeping 2021 pandemic-era aid package to eliminate more than $1 billion in medical debt for more than 700,000 Americans.
The administration announced plans for the rule in fall 2023.
The CFPB said that medical debt is a poor predictor of an individual’s ability to repay a loan. Experian, Equifax and TransUnion, the three national credit reporting agencies, said last year that they were removing medical collections debt under $500 from U.S. consumer credit reports.
The new rule from the Biden administration is set to take on the outstanding bills appearing on credit reports.
Charlotte Resident Dontrell McCray said prior medical bills have shown up when he has tried to borrow money.
“Some people are even scared to go to hospitals, or not even scared, just thinking about the bill they got to pay,” McCray said.
He’s in favor of this new rule.
“It makes my credit look a little crazy with that amount of medical bills, so I feel like that’s a great thing,” McCray said.
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