US bans medical debt from credit reports as Biden nears exit | Health News

The Consumer Financial Protection Bureau says the change would hit $49 billion in medical debt from credit reports.

U.S. consumers will no longer show medical debt on their credit reports under changes that will make it easier for millions of Americans to get loans.

The Consumer Financial Protection Bureau (CFPB) said Tuesday that the new rule means lenders will be prohibited from using medical information in their lending decisions.

Under the change, an estimated $49 billion in medical debt would be taken off the credit reports of more than 15 million Americans, the CFPB said.

The consumer watchdog said its research showed medical debt is a poor indicator of whether a loan will be repaid, and it expects the change would result in nearly 22,000 more mortgages being approved each year.

“People who get sick should not have their financial futures upended,” CFPB Director Rohit Chopra said in a statement.

“The CFPB’s final rule will close a special withholding 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 “will help more Americans save money, build wealth, and prosper.”

This action comes less than two weeks before US President Joe Biden is scheduled to hand over control of the White House to US President-elect Donald Trump.

It is unclear whether the rule, which takes 60 days to take effect, will remain in its current form under Trump, who has pledged to reduce government regulations and undo much of Biden’s agenda.

A number of Republicans have expressed concerns that the proposed change would impair 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.