Medical debt will be removed from credit reports under a proposed White House change that could help millions of Americans find a job, rent a home or get a car loan.
Vice President Kamala Harris and Rohit Chopra, director of the Consumer Financial Protection Bureau, formally announced the proposal to take unpaid medical bills off the table in determining a person’s creditworthiness during a press conference Tuesday.
The idea is to no longer “unfairly punish people who get sick,” Chopra said. He highlighted the potential financial damage caused by a single trip to a hospital emergency room, a debt “acquired unexpectedly and in times of crisis”.
Additionally, CFPB researchers to have found that medical debt, unlike other types of debt, does not accurately predict a consumer’s creditworthiness, making it virtually useless on a credit report.
Still, medical debt is leading to thousands of applications being denied for mortgages that consumers would be willing to repay, the agency said. The CFPB expects the proposed rule to lead to the approval of about 22,000 additional secure mortgages each year, it said.
The Biden administration announced its intentions in September to craft the measure, among the most significant federal steps taken to combat medical debt.
The three largest credit agencies – Equifax, Experian and TransUnion – have stopped including certain medical debts on credit reports since last year. Excluded medical debts included paid bills and those less than $500.
But the agencies’ voluntary actions left millions of patients with higher medical bills on their credit reports.
About 15 million Americans have more than $49 billion in unpaid medical bills in collections, according to results published by the CFPB in April.
Letting debt pile up due to often unforeseen health needs is a problem shared by many, forcing some to take on extra work, abandon their homes and ration food and other necessities, a survey finds from KFF Health News-NPR. find.
Credit scoring, a threat designed to force patients to pay their bills, is the most common collection tactic used by hospitals, a study finds. KFF Health News Analysis.
“Negative credit reports are one of the biggest problems for patients with medical debt,” said Chi Chi Wu, a senior…
