Medical Debt Removed from Credit Reports

Medical Debt Removed from Credit Reports

New Rule for Credit Reports

Earlier this month, the Consumer Financial Protection Bureau (CFPB) finalized a rule that will remove an estimated $49 billion in medical bills from the credit reports of about 15 million Americans. That is not a typo – $49 billion. The CFPB’s action will ban the inclusion of medical bills on credit reports used by lenders and prohibit lenders from using medical information in their lending decisions. In addition, the CFPB expects the rule will lead to the approval of approximately 22,000 additional mortgages every year.

Consumer Financial Protection Bureau Chief on Medical Debt

“People who get sick shouldn’t have their financial future upended,” said CFPB Director Rohit Chopra. “The CFPB has found that medical debts provide little predictive value to lenders about the borrower’s ability to repay other debts including their mortgage.”

“I am very happy about this new rule,” said Chopra. “As many of you, I have had my own conflicts with insurance companies over medical bills. Also, I have seen potential homebuyers’ credit severely damaged by medical collections when, in fact, they pay all of their credit cards, mortgage, and other loans on time. Often they did not even know that they had the collection until I shared that it was on their credit report. Once it is on the credit report, it is very hard to get it removed, even if you are right.”

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