Harris said that states and localities have already eliminated over $1 billion in medical debt.
Vice President Kamala Harris announced on Tuesday a final rule by the Consumer Financial Protection Bureau (CFPB) that will remove $49 billion in unpaid medical bills from the credit reports of 15 million Americans.
The move will raise their credit scores by an estimated average of 20 points and lead to the approval of about 22,000 additional mortgages annually,
according to Harris’s office.
“Today, we are building on this meaningful work by announcing an unprecedented final rule that will make it so medical debt is no longer included in your credit score,” Harris said in a statement. “This will be lifechanging for millions of families, making it easier for them to be approved for a car loan, a home loan, or a small-business loan.”
The CFPB previously
stated that medical billing is “often riddled with errors, including inflated or duplicative charges, fees for services the patient never received, or charges already paid,” making it less reliable for predicting future repayment.
Harris said that states and localities have already eliminated over $1 billion in medical debt for more than 700,000 Americans by leveraging the American Rescue Plan (ARP) funds, which are part of the federal government’s efforts to abolish $7 billion in medical debt by 2026.
These include New Jersey, Connecticut, and several counties in Louisiana, Michigan, and Illinois.
North Carolina
announced in August that 99 eligible hospitals participated in the state’s program that will remove up to $4 billion in existing medical debt for nearly 2 million North Carolinians.
To ease Americans’ medical debt burden, the federal government has expanded pathways for debt forgiveness and taken actions against “predatory debt collection tactics,” the vice president stated.
“As someone who has spent my entire career fighting to protect consumers and lower medical bills, I know that our historic rule will help more Americans save money, build wealth, and thrive,” she said.
The rule stemmed from the CFBP’s June 2024
proposal, which sought to ban creditors from using medical debt when assessing people for loans. The CFPB stated that medical bills accounted for $88 billion in reported debts on credit reports in 2022, and 46 million people had medical debts listed on their credit reports in 2020.
In 2023, the three major credit reporting agencies—Equifax, Experian, and TransUnion—
agreed to remove all medical collections under $500 and were barred from reporting invalid medical debt. Despite this, the CFPB found that 15 million Americans still have $49 billion in outstanding medical bills in collections on the credit reporting system in 2024, prompting the proposed changes to how medical debt is used in credit assessments.
