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Vice President Kamala Harris announced Tuesday that Americans will no longer be penalized for medical debt on credit reports.
The Consumer Financial Protection Bureau’s final decision will wipe out $49 billion in unpaid medical bills based on the credit reports of 15 million Americans.
Harris also said a handful of states and localities have leveraged American Rescue Plan (ARP) funds to support the elimination of more than $1 billion in medical debt for more than 700,000 Americans.
“No one should be denied an economic opportunity because they became ill or suffered a medical emergency,” Harris said, in part. “We have also reduced the medical debt burden by increasing cancellation avenues and cracking down on predatory debt collection tactics.
HEALTH CARE IS COSTLY AND FRUSTRATING; GOVERNMENT INVOLVEMENT IS A BIG DRIVER
Vice President Kamala Harris announced Tuesday that Americans will no longer be penalized on credit reports for medical debt. (AP Photo/Jose Luis Magana / AP News Room)
The decision responds in part to Harris’ call to action for states to reduce the medical debt burden that often prohibits access to credit for essential living expenses.
“This will change the lives of millions of families, making it easier for them to get approved for an auto loan, home loan or small business loan,” Harris said.
The CFPB’s decision is expected to increase affected individuals’ credit scores by about 20 points on average and lead to the approval of about 22,000 additional mortgage loans each year.
Harris also announced that states and localities leveraged American Rescue Plan (ARP) funds to support the elimination of more than $1 billion in medical debt for more than 700,000 Americans. (iStock/iStock)
POLICY GROUP SAYS HARRIS SMALL BUSINESS BREAK IS DROWNED BY MORE HIGHER TAXES
The three largest credit reporting agencies, Experian, TransUnion and Equifax, announced in March 2022 that they will no longer include unpaid medical debts less than a year old and medical debts less than $500 on credit reports.
Even though small unpaid bills no longer show up on credit reports, having massive medical debt can have a significant impact on a consumer’s ability to get a loan, even though CFPB research shows that medical bills are poor indicators of an individual’s ability to pay a loan. disabled.
Experian, TransUnion and Equifax no longer include unpaid medical debt less than a year old and medical debt less than $500 on credit reports. (Collection Smith/Gado/Getty Images / Getty Images)
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Although the law will eliminate medical debts from appearing on credit reports, debts that are not relieved will still have to be paid.
Those who use credit cards to pay medical bills will still see these unpaid debts on their report because they are not covered by the ruling.
