Rule Bans Medical Debt from Credit Reports by March

The Biden administration has finalized a rule through the Consumer Financial Protection Bureau (CFPB) that prohibits unpaid medical bills from appearing on credit reports, effectively removing $49 billion in medical debt for over 15 million Americans. This policy aims to enhance economic opportunities by raising average credit scores by 20 points, potentially leading to 22,000 additional mortgage approvals annually. The rule, set to take effect in March, intends to prevent lenders from using medical debt as a basis for creditworthiness, addressing long-standing issues of medical debt being a poor indicator of loan repayment ability. The regulation has received support for its potential to alleviate financial strain for many, but faces opposition from Republicans and debt collectors who may attempt to reverse it under the incoming Trump administration. It builds on previous voluntary measures by major credit agencies to exclude certain medical debts from reports. Vice President Kamala Harris highlighted the rule's significance, stating it would be 'life-changing' for many families.