The CFPB has finalized a rule to remove approximately $49 billion in medical debt from credit reports.

• The Consumer Financial Protection Bureau has finalized a rule that will remove an estimated $49 billion in medical bills from credit reports.
• The CFPB reported that Americans with medical debt could see their credit scores increase by an average of 20 points.
• Over $1 billion in medical debts have been erased by Vice President Kamala Harris.

On Tuesday, the Consumer Financial Protection Bureau announced the finalization of a rule that will remove approximately $49 billion in medical debt from credit reports, impacting an estimated 15 million Americans.

The CFPB reports that individuals with medical debt on their credit reports may see their credit scores increase by an average of 20 points after the rule change. This change is also expected to result in the approval of approximately 22,000 additional affordable mortgages annually.

The CFPB proposed a rule in June that prohibits consumer reporting agencies from including medical debt information with credit reports and credit scores sent to lenders, and also prevents creditors from using certain medical information for lending decisions.

In 2025, retirees will see changes in Social Security and Medicare. Biden withdrew student loan forgiveness plans, but there is still debt relief available.

The Biden-Harris administration reports that over 100 million Americans face medical debt, which is the largest type of debt in collections, surpassing auto loans, credit cards, and utilities.

According to the CFPB, consumers frequently report receiving inaccurate medical bills and are often asked to pay balances that should be covered by health insurance or financial assistance programs.

"Debt collectors should not be allowed to abuse the credit reporting system and ruin the financial future of those who are sick, according to CFPB Director Rohit Chopra," the statement said. "The CFPB's final rule will put an end to a special carveout that has enabled this abuse."

In 2022, a report from the agency revealed that medical bills made up $88 billion of debts on credit reports as of June 2021. Following this discovery, the three major credit reporting agencies - Equifax, Experian, and TransUnion - removed certain types of medical debt from credit reports, including debts under $500. Additionally, credit scoring companies FICO and VantageScore adjusted their scoring models to minimize the influence of medical debt on credit scores.

More than $1 billion in medical debt eliminated

In states such as New Jersey and Connecticut, as well as counties like Cook County, Illinois, Lucas County, Ohio, Wayne and Oakland counties, Michigan, and cities including Cleveland and Toledo, Ohio, New Orleans, St. Paul, Minnesota, and Washington, D.C., residents have had their medical debt eliminated.

Almost 3 million Americans may have up to $7 billion in medical debt eliminated by the end of 2026 with the help of the American Rescue Plan Act, which was passed in 2021.

"Economic opportunities should not be denied to individuals due to illness or medical emergencies," Harris stated.